Bitcoin Drops 5% After Trump's Strategic Reserve Order

Bitcoin (BTC) experienced a significant decline over the weekend, with its price dropping to an intraday low of $80,005. This downturn was driven by a combination of factors, including the market's reaction to President Donald Trump's executive order to create a strategic Bitcoin reserve, ongoing trade tensions, and the potential for a trade war with China. The executive order, which directs the Secretaries of Treasury and Commerce to develop a budget-neutral strategy for acquiring Bitcoin, did not allocate any actual budget for immediate purchases. This realization led to a knee-jerk reaction from investors, who pulled their capital from the market, causing Bitcoin to tumble about 5% immediately following the announcement.

Despite the short-term disappointment, many analysts view the strategic Bitcoin reserve as a significant milestone for the asset. The order mandates a 60-day Treasury review of legal and investment considerations for the reserve, while Treasury and Commerce explore additional avenues to acquire Bitcoin. Matt Hougan, Chief Investment Officer at Bitwise Asset Management, believes that this executive order makes it more likely that Bitcoin will become a geopolitically important currency or asset in the future. He suggests that other governments may look to follow the U.S.’s lead and build their own strategic reserves, which could be bullish for Bitcoin in the long term.

Bitcoin's price action has shown similarities to past events, such as its surge to a new all-time high following Donald Trump’s inauguration in 2025 and the launch of spot Bitcoin ETFs in January 2024. Both events were followed by market corrections, with Bitcoin dropping to $80,000, a decline of almost 30% since Trump’s inauguration. While the price action indicates bearishness in the short term, Bitcoin bulls view it as a long-term catalyst, especially with the U.S. adopting a more favorable stance towards Bitcoin and crypto.

The price of Bitcoin has been volatile over the past week, with sharp declines and recoveries. On Friday, BTC dropped below $80,000 to a low of $78,173 before recovering to reclaim $80,000 and settle at $84,362. The price recovered on Saturday, rising over 2% and settling at $86,182. Bullish sentiment intensified on Sunday as markets rallied, with BTC surging over 9%