Trump Bitcoin Reserve Announcement Leads to 5% Market Drop

US President Donald Trump's recent executive order to establish a strategic Bitcoin reserve has failed to generate significant excitement among investors, resulting in a market downturn. Initially, there was a surge in Bitcoin prices following the announcement, but this was short-lived. The market quickly reversed course after it became clear that the reserve would not be funded with taxpayer money.

Bitcoin prices fell by over 5% on Friday, with other major cryptocurrencies such as Ethereum, XRP, Cardano, and Solana also experiencing losses of up to 5%. The executive order, signed just a day before Trump's scheduled meeting with cryptocurrency executives, aims to create a federally managed Bitcoin reserve. However, the reserve will be capitalized with digital assets seized from criminal and civil asset forfeiture cases, rather than using government funds to purchase Bitcoin.

Trump specified that the reserve would include five digital assets: Bitcoin, Ethereum, XRP, Solana, and Cardano. The initial news of these assets being backed by the U.S. government led to a brief surge in their market values. However, when it became clear that taxpayer funds wouldn’t be used to acquire additional Bitcoin, investor sentiment soured. David Sacks, the White House crypto czar, reinforced that the U.S. government would not be actively purchasing Bitcoin but instead stockpiling already forfeited assets. “The U.S. will not sell any Bitcoin deposited into the reserve. It will be kept as a store of value, like a digital Fort Knox,” Sacks posted on social media platform X.

Despite the market’s initial disappointment, some experts view the move as a long-term positive for the crypto industry. Ashish Singhal, Co-founder of CoinSwitch, believes the decision signals a shift toward mainstream adoption of digital assets. “With the decision to build Bitcoin reserves through enforcement actions rather than taxpayer funds, the U.S. has signaled its intent to embrace the future of digital finance. While the market initially reacted with mixed signals, the long-term implications are undeniably bullish—clearer regulations, reduced uncertainty, and a stronger foundation for institutional adoption,” Singhal said.

Singhal also pointed out that this move could serve as a wake-up call for regions with restrictive tax policies, driving crypto entrepreneurs and investors overseas. “If we want to lead in Web3, we need to embrace progressive regulations, foster innovation, and create an environment where