Trump Establishes Bitcoin Reserve, Market Awaits Crypto Tax Policy

U.S. President Donald Trump recently signed an executive order to establish a strategic bitcoin (BTC) reserve. This reserve includes BTC seized by the U.S. government through various law enforcement actions. The White House crypto and AI czar, David Sacks, clarified that the stockpile will also include other coins forfeited in criminal or civil proceedings, emphasizing that no taxpayer money will be used to acquire BTC or other coins.

According to Arkham Intelligence, the U.S. government currently holds 198,000 bitcoins, valued at approximately $17.3 billion. By treating these holdings as a reserve, the government effectively removes over $17 billion in potential selling pressure from the market. Despite this, bitcoin prices initially dropped to lows near $84,700, reflecting investor disappointment over the lack of new BTC purchases by the U.S. government. However, prices have since recovered to $87,600, with hopes that Trump will announce a favorable crypto tax policy at the upcoming White House crypto summit.

Market experts have weighed in on the strategic reserve. Valentin Fournier, an analyst, noted that the executive order has disappointed some investors due to the lack of a clear acquisition plan for additional assets. This uncertainty has led to a decline in market sentiment, resulting in a 4% daily drop in Bitcoin, Ethereum, and Solana. However, Fournier also pointed out that Commerce Secretary Howard Lutnick has been authorized to develop a budget-neutral strategy for acquiring additional Bitcoin, which could signal a hidden accumulation strategy by the U.S. government, potentially igniting a parabolic rally.

Dick Lo, CEO of a quant-driven digital assets trading firm, expressed initial disappointment as the market had built up high expectations leading up to the announcement. However, he emphasized that the news is unambiguously positive, as it distinguishes between Bitcoin and other cryptocurrencies, with no dollars spent on buying altcoins. Lo also suggested that further positive announcements could come from the Crypto Summit, including more favorable tax treatment towards crypto.

Andrew O’Neill, Digital Assets Managing Director, highlighted the symbolic significance of the executive order, as it marks the first time bitcoin is formally recognized as a reserve asset of the U.S. government. The reserve will initially include only the BTC already owned by the government, specifically those forfeited through criminal or civil procedures