What Happened?
U.S. President Donald Trump has signed an executive order establishing a “Strategic Bitcoin Reserve,” which will be funded by Bitcoin obtained through government seizure cases, and prohibits the government from selling these Bitcoins. Following the signing of Trump’s executive order, the price of Bitcoin fell sharply by about 6%, dropping from $90,400 to $84,979. The decline in Bitcoin’s price, despite the establishment of the Strategic Bitcoin Reserve, is attributed to the market’s initial expectation that the government would purchase more Bitcoins; however, officials stated that the reserve would only utilize existing seized Bitcoins and would not make further purchases.
Trump Signs Executive Order to Create “Strategic Bitcoin Reserve,” Relieving 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) officer, the reserve will be entirely composed of Bitcoins seized by the government through criminal or civil asset forfeiture proceedings, 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 already seized a considerable amount of Bitcoin in the past, with the most notable case being related to the dark web marketplace “Silk Road.” Additionally, seizures may have occurred due to hacker attacks, money laundering, and other illegal activities. According to data from CoinGecko, the U.S. government holds approximately 200,000 Bitcoins, with a market value of around $18 billion. Trump’s executive order stipulates that the Bitcoin reserve will be viewed as a digital version of a “vault,” prohibiting any sales of Bitcoin and treating it as a permanent store of value.
Extended Reading: Trump Announces Establishment of “U.S. Cryptocurrency Reserve”! Bitcoin Surges Past $90,000, XRP, SOL, and ADA Spike 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 could have profound implications for the Bitcoin market, especially for those who hope to see Bitcoin become a global mainstream asset; Trump’s move undoubtedly provides Bitcoin with greater official recognition.
Diverse Digital Asset Reserves Questioned: Why Is Bitcoin the Sole Choice?
On March 2, Trump posted on the social media platform Truth Social, announcing that Bitcoin, Ethereum, XRP, Solana, and Cardano would become part of the strategic reserve. However, this news triggered backlash within the cryptocurrency community.
Bitcoin billionaire Tyler Winklevoss stated on platform X that, aside from Bitcoin, other digital assets do not meet the criteria to become part of the “strategic reserve,” emphasizing that currently only Bitcoin holds global asset value. This is because Bitcoin uniquely exhibits characteristics such as decentralization, scarcity, and market recognition, being considered to possess the potential to become “digital gold.” Thus, Bitcoin stands out among various digital assets, becoming the sole choice for national strategic reserves in response to digital economy, inflation, and geopolitical risks.
Market Reaction: Bitcoin Price Volatility and Investor Concerns Over Reserve Management
Despite the announcement of Trump’s executive order, the market reaction was relatively subdued, with Bitcoin’s price dropping about 6%, from $90,400 to $84,979. The decline in Bitcoin’s price, despite the establishment of the Strategic Bitcoin Reserve, likely stems from market expectations that the government would purchase more Bitcoins; however, officials clarified that the reserve would utilize only existing seized Bitcoins and would not make additional purchases. Nevertheless, as the market further digests the news, Bitcoin’s price has rebounded to $87,460 as of the time of writing.
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 tool, it could trigger significant market volatility and unnecessary speculative risks. Fintech investor Ryan Gilbert noted 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 a certain degree of official support for Bitcoin’s legitimacy, it also highlights the various challenges that may arise during implementation.
Regardless, this decision will undoubtedly spark 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