What Happened?
U.S. President Donald Trump signed an executive order to establish a “Strategic Bitcoin Reserve,” which will be funded by Bitcoin obtained through government confiscation cases and prohibits the government from selling these Bitcoins. Following the signing of Trump’s executive order, the price of Bitcoin dropped significantly by about 6%, falling from $90,400 to $84,979. The creation of the Strategic Bitcoin Reserve by Trump led to a price decline instead of an increase because the market had initially anticipated that the government would purchase more Bitcoin, but officials stated that the reserve would only utilize the Bitcoins already confiscated by the government and would not make further purchases.
Trump Signs Executive Order to Establish “Strategic Bitcoin Reserve,” Alleviating Taxpayer Burden
On March 7, 2025, U.S. President Donald Trump officially signed an executive order announcing the establishment of the “Strategic Bitcoin Reserve” in a significant shift in U.S. digital asset policy. According to David Sacks, the White House’s Digital Assets and Artificial Intelligence (AI) Commissioner, the reserve will be entirely composed of Bitcoin funds acquired by the government through criminal or civil asset forfeiture, ensuring that no additional financial burden is placed on taxpayers.
Just a few minutes ago, President Trump signed an Executive Order to establish a Strategic Bitcoin Reserve.
The Reserve will be capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings. This means it…— David Sacks (@davidsacks47) March 7, 2025
The rationale behind this order is that the U.S. has previously confiscated a considerable amount of Bitcoin, with the most notable case related to the dark web marketplace “Silk Road.” Additionally, Bitcoin may have been seized in connection with hacking, money laundering, and other illegal activities. According to data from CoinGecko, the U.S. government holds approximately 200,000 Bitcoins, valued at around $18 billion. Trump’s executive order stipulates that the Bitcoin reserve will be regarded as a digital version of a “vault,” prohibiting any sales of Bitcoin and treating it as a permanent store of value.
Related Reading: Trump Announces Establishment of “U.S. Cryptocurrency Reserve”! Bitcoin Surges Past $90,000, XRP, SOL, ADA Soar Over 25%
In other words, the U.S. will not “actively” acquire Bitcoin but will also not sell any of the Bitcoins held by the government. This strategic positioning may have profound implications for the Bitcoin market, especially for supporters wishing for Bitcoin to become a mainstream global asset, as Trump’s actions undoubtedly grant Bitcoin greater official recognition.
Diverse Digital Asset Reserve Questioned: Why is Bitcoin the Sole Choice?
On March 2, Trump announced on the social platform Truth Social that Bitcoin, Ether, XRP, Solana, and Cardano would be part of the strategic reserve. However, this announcement sparked backlash within the cryptocurrency community.
Bitcoin billionaire Tyler Winklevoss stated on the X platform that, aside from Bitcoin, other digital assets do not meet the criteria to be considered part of the “strategic reserve,” emphasizing that currently, only Bitcoin possesses the value of a global asset. This is because Bitcoin is the only asset that simultaneously has decentralization, scarcity, and market recognition, making it a contender for “digital gold,” thus standing out in a diverse digital asset reserve as the sole choice for national strategic reserves to address digital economy, inflation, and geopolitical risks.
Market Reaction: Bitcoin Price Volatility, Investor Concerns Over Reserve Management
Despite the announcement of Trump’s executive order, the market reaction was relatively muted, with Bitcoin’s price briefly dropping by about 6%, from $90,400 to $84,979. The establishment of the Strategic Bitcoin Reserve by Trump caused the price to decline instead of rise, likely because the market had anticipated the government would buy more Bitcoin, while officials indicated that the reserve would only use the existing confiscated Bitcoins without further purchases. However, as the market digested this information, Bitcoin’s price had rebounded to $87,460 before the publication of this article.
The primary concern in the market revolves around how the U.S. government will manage the reserve. Some investors worry that if the U.S. treats the Bitcoin reserve as a short-term investment instrument, it could lead to severe market fluctuations and unnecessary speculative risks. Fintech investor Ryan Gilbert pointed out that the reserve should serve as a long-term store of value rather than a tool for market speculation. While this action by the Trump administration provides some official support for Bitcoin’s legitimacy, it also highlights various challenges that may arise during implementation.
Regardless, this decision will undoubtedly trigger widespread discussions globally regarding digital asset policies, reserve management, and their market impacts, potentially guiding the future development direction of digital currencies.
References: cnbc, cnn, cointelegraph