Bitcoin’s price has seen a significant dip despite the announcement of the U.S. government’s strategic Bitcoin reserve, triggering a wave of selling pressure. After the executive order signed by President Trump, which aimed to establish a Bitcoin reserve, Bitcoin’s price dropped sharply from $92,000 to under $85,000, reflecting a decline of over 7% in the past 24 hours. Other major altcoins like Ethereum (ETH), Solana (SOL), and Cardano (ADA) also suffered losses, with drops ranging between 5-10%.
Key Reasons Behind the Drop
“Sell the News” Effect: The announcement of Trump’s executive order regarding the Bitcoin reserve triggered a classic “sell the news” event. Investors often buy the rumor and sell the news, and this trend was observed as Bitcoin and other cryptocurrencies experienced significant price declines after the official announcement.
Lack of Clarity on Reserve Expansion: A key issue causing market uncertainty is the lack of clarity on how the U.S. government plans to further fund the strategic reserve beyond the Bitcoin already seized. The executive order focuses on maintaining the current Bitcoin holdings rather than expanding them, leading some to question whether additional Bitcoin will be added to the reserve in the future.
Debate Over Altcoin Inclusion: Another concern within the crypto community is whether the U.S. government will purchase additional altcoins like Ethereum (ETH), Solana (SOL), or Cardano (ADA) for the reserve. Economic experts like Peter Schiff have pointed out that the executive order clearly states that the reserve will only consist of Bitcoin, not other altcoins. This has left some investors relieved but still unsure about the future direction of government involvement in the crypto market.
Strategic Bitcoin Reserve Execution Path
Despite the price drop, experts suggest that the executive order may pave the way for substantial Bitcoin accumulation without burdening taxpayers. Two potential strategies have been outlined for acquiring Bitcoin:
Presidential Authority: The U.S. government could use the Exchange Stabilization Fund (ESF), which currently holds around $39 billion, to acquire Bitcoin immediately without adding further costs to the national budget.
Congressional Approval: Under Senator Cynthia Lummis’s Bitcoin Act, the government could acquire up to 200,000 BTC annually over five years. This plan would involve leveraging the revaluation of gold in a budget-neutral way, ensuring no added financial burden.
Market Outlook
While Bitcoin prices have fallen in the short term, the long-term outlook remains uncertain. The strategic reserve concept offers an opportunity for significant Bitcoin accumulation by the U.S. government, but market participants are closely monitoring whether this will lead to further institutional investment and government-backed purchasing of Bitcoin in the future. The Bitcoin Act proposed by Senator Lummis is also seen as a crucial development, potentially leading to the acquisition of 1 million Bitcoin over the next five years.
As the debate continues about the future direction of U.S. policy on Bitcoin and digital assets, Bitcoin’s price and the broader crypto market are likely to remain volatile, with investors awaiting further clarity on the government’s next steps.
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