Trump Bitcoin Reserve Announcement Triggers 3% Bitcoin Drop

On March 7, 2025, the cryptocurrency market experienced a significant downturn following President Trump’s executive order establishing a U.S. strategic Bitcoin reserve and a separate initiative known as the “digital asset stockpile.” Despite initial expectations that this policy would boost the cryptocurrency market, prices fell sharply when it became clear that the U.S. government was not prepared to purchase more Bitcoin immediately.

Bitcoin dropped by 3% to $87,586, briefly bottoming at $84,688. This decline affected other major cryptocurrencies, including Ethereum, XRP, Solana, and Cardano, which also saw decreases in value. Market analysts attributed this selling spree to the disappointment of traders who had hoped for a more aggressive accumulation strategy that would lead to quicker price increases and improve overall market stability.

Investor sentiment turned negative after the U.S. government clarified its Bitcoin holdings, which include seized assets. Contrary to expectations of an active purchasing initiative to augment the government’s strategic Bitcoin reserve, the administration indicated that acquisitions would remain limited to seized assets. This announcement intensified market unease, highlighting the impact of the strategic Bitcoin reserve and triggering a Bitcoin sell-off.

According to David Sacks, the White House crypto and AI advisor, the plan for increasing the national cryptocurrency reserve primarily relies on the forfeiture of Bitcoin through ongoing law enforcement operations. This approach protects taxpayers from direct expenditures on asset accumulation. The U.S. currently possesses around 198,000 bitcoins, valued at approximately $17 billion. However, the lack of confirmed active procurement plans disappointed investors, preventing Bitcoin from reestablishing support above the $90,000 threshold.

The executive order also created a government-held digital asset stockpile beyond just Bitcoin, encompassing confiscated cryptocurrencies. Arkham data indicates the U.S. government possesses about 56,000 ETH, valued at approximately $119 million, without mentioning holdings of XRP, Solana, or Cardano.

While this action is seen as a positive step towards clearer regulation, it has not alleviated existing market liquidity worries. The crypto community had hoped to see a defined asset procurement model mirroring established central banking strategies. Absent assertive strategies to acquire digital assets, early optimism waned. This uncertainty, alongside overall