Crypto Markets Tumble as Trump's Strategic Reserve Faces Skepticism
1min read Cryptocurrency markets are currently under pressure due to a lack of positive catalysts and skepticism surrounding the potential formation of a U.S. strategic crypto reserve. Analysts from jpmorgan have expressed doubts about whether Congress will approve such a reserve, citing concerns about the feasibility of including smaller, more volatile tokens beyond Bitcoin (BTC) and Ether (ETH).
President Donald Trump recently directed his administration to establish a Bitcoin Strategic Reserve, which would hold assets seized by the government. However, the inclusion of other crypto assets remains unclear, despite earlier mentions of XRP, Solana (SOL), and Cardano (ADA).
JPMorgan's report highlights that discussions about including Bitcoin in strategic reserves at the state level have also faced rejection. States such as Montana, North Dakota, South Dakota, and Wyoming have turned down such proposals due to concerns about risk and volatility. Similarly, central banks around the world have shown caution. The Swiss national bank, the National Bank of Poland, and the Monetary Authority of Singapore have all rejected the idea of including Bitcoin in their reserves, opting for more stable assets like gold. The European Central Bank has also criticized the notion of Bitcoin as a reserve asset, reflecting broader skepticism among policymakers.
JPMorgan's analysts have indicated that there is less than a 50% chance of such a reserve gaining approval due to congressional hurdles and skepticism from policymakers. The co-founder of Solana, Anatoly Yakovenko, has also questioned the impact of a potential strategic reserve on decentralization. The feasibility of establishing such a reserve is questionable, with various hurdles and a lack of clear operational details.
Trump's announcement of a National Strategic Crypto Reserve initially sparked bullish sentiment in the market. However, analysts quickly raised questions about the feasibility and benefits of such a reserve. The purpose of the reserve is to encourage institutional adoption and influence global crypto regulations, but significant legal and operational uncertainties surround its establishment. The source of the reserve's authority and the criteria for allocating different cryptocurrencies remain unclear, leaving many operational details undefined.
One of the key challenges is the custody and security of the digital assets. The government has not specified whether a federal agency or third-party custodians will hold the assets, nor how they will ensure security and transparency. This lack of detail raises concerns about potential cybersecurity risks and losses. Additionally, the timing 