Trump Establishes Bitcoin Reserve, Market Reacts with 5% Crash

On March 6, President Donald Trump signed an executive order establishing a Strategic Bitcoin Reserve and a Digital Asset Stockpile. This order directs the federal government to retain forfeited cryptocurrencies as a long-term store of value. The Treasury Department will oversee the management of both reserves, but the government will not actively acquire additional assets beyond those seized through criminal and civil asset forfeiture proceedings.

The order tasks Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick with developing budget-neutral strategies to expand the country’s Bitcoin holdings without incurring additional taxpayer costs. However, the order does not provide further details or a timeline for when these holdings would be expanded.

The market reacted negatively to the revelation that the government would not immediately acquire more Bitcoin for the reserve. The lack of an immediate accumulation strategy has tempered market enthusiasm. Bitcoin crashed more than 5% within minutes to a low of $85,000 before attempting to stem the bleeding. The flagship crypto was trading at $86,000 as of press time. The wider market followed suit, with major alts falling 6% across the board.

The order mandates that Bitcoin seized through criminal and civil asset forfeiture proceedings will be deposited into the reserve, ensuring no additional costs to taxpayers. Meanwhile, the Digital Asset Stockpile, a separate pool, will hold cryptocurrencies other than BTC that are also obtained through forfeiture. The order also calls for a full audit of the government’s digital asset holdings, with estimates suggesting the US owns approximately 200,000 BTC.

The new policy prevents the government from selling any Bitcoin in the reserve, likening it to a digital equivalent of Fort Knox. Supporters of the move argue it could prevent past missteps, referencing instances where early Bitcoin sales led to billions in lost potential value. The move aligns with Trump’s broader push to position the US as a global leader in digital assets. David Sacks, a key advocate within the administration, praised the decision, calling it a fulfillment of Trump’s campaign promises to support crypto innovation.

While the executive order signals a shift in federal digital asset policy, questions remain about its long-term implications. Some analysts warn that maintaining a Bitcoin reserve without active management could expose the government to market volatility. Additionally, regulatory hurdles and congressional oversight may further impact how the initiative develops. The order highlights the administration’s accelerating