Bitcoin and Ethereum Extend Losses Amid Trade Tensions & Strategic Bitcoin Reserve Announcement
The crypto market downturn continues as traders react to President Donald Trump’s Strategic Bitcoin Reserve order and escalating U.S. trade tariffs.
Bitcoin and Ethereum Price Drop
Bitcoin (BTC) has fallen 4.8% to $81,729, while Ethereum (ETH) has dropped 8%, trading near $2,000, a level not seen since November 2023. Dogecoin (DOGE) leads the top 10 crypto losses, plunging 13% to $0.16.
Despite Trump’s Executive Order establishing a Strategic Bitcoin Reserve, traders appear unconvinced about immediate government Bitcoin acquisitions.
Why Is Bitcoin Dropping After Trump’s Bitcoin Reserve Order?
According to QCP Capital, a Singapore-based digital asset trading firm, Bitcoin’s initial sell-off came from traders realizing that no immediate budget was allocated for purchasing Bitcoin.
The Executive Order tasks the Secretaries of Treasury and Commerce with developing budget-neutral strategies for Bitcoin acquisitions but does not authorize taxpayer-funded purchases at this stage.
David Lawant, head of research at FalconX, noted that Bitcoin initially fell 5% following the announcement but later recovered some losses, reflecting uncertainty over whether the U.S. government will actively buy crypto assets.
Bitcoin Reserve: A Step Toward Institutional Adoption?
Despite short-term market concerns, some analysts view the Bitcoin Strategic Reserve as a major milestone for institutional Bitcoin acceptance.
The reserve will be separate from the Digital Asset Stockpile, which includes altcoins like Ethereum. The U.S. government is expected to seed the reserve with Bitcoin seized through criminal and civil asset forfeitures.
Currently, U.S. government wallets hold approximately 198,000 BTC, valued at $16.1 billion, according to Arkham Intelligence. However, some holdings originate from exchange hacks and may be subject to legal disputes.
What’s Next? Treasury to Review Bitcoin Reserve Strategy
The Executive Order mandates a 60-day Treasury review on the legal and investment implications of the Bitcoin Reserve. Additionally, Treasury and Commerce officials will explore alternative ways to acquire more Bitcoin without impacting the federal budget.
Potential solutions include:
✅ Reallocating a portion of U.S. gold reserves
✅ Utilizing the Exchange Stabilization Fund
Despite initial market volatility, experts suggest that this move sets a precedent for sovereign Bitcoin adoption, marking a significant step toward crypto institutionalization.
