Cryptocurrency prices fell on Friday as an executive order from President Donald Trump to establish a US strategic bitcoin reserve left investors disappointed the plan would not trigger a wave of large-scale government purchases of digital assets.
The price of bitcoin dropped as much as 6.6 per cent before rebounding slightly to trade around $89,000 after the order, signed late on Thursday, said the reserve would hold only assets that had been forfeited to US law enforcement authorities.
Traders had hoped the US government would begin buying bitcoin and other cryptocurrencies, after Trump ignited hopes with a social media post on Sunday. His comments that a reserve could include ethereum and lesser-known cryptocurrencies cardano, solana and XRP sparked a surge in their prices.
A reserve asset is typically a critical resource that can be used in times of crisis. The US has an emergency oil reserve to protect it against supply shocks while many countries have gold reserves.
The White House said it would also establish a national digital assets stockpile of tokens other than bitcoin, without specifying which ones. The government said it “will not acquire additional assets” for the stockpile beyond those obtained through investigations, and may enact “potential sales” from it.
Ethereum, which is the second-biggest crypto token, dropped 4.5 per cent to $2,194. Ada, the token for the cardano blockchain, was down 7.8 per cent to $0.87, solana fell 5.6 per cent to $143 while XRP shed 3.4 per cent to $2.52.
Supporters of a bitcoin reserve have argued the US should build a reserve that could serve as an alternative to the dollar. Bitcoin has been likened to ‘digital gold’ as an asset that cannot be debased by central banks or government policies.
The Trump administration also pledged to look at buying more bitcoin as long as its strategies were “budget neutral and do not impose incremental costs on United States taxpayers”.
“The US will not sell any bitcoin deposited into the Reserve. It will be kept as a store of value. The Reserve is like a digital Fort Knox for the cryptocurrency often called ‘digital gold’,” confirmed David Sacks, the billionaire investor and the White House’s crypto tsar on the social media site X.
Sacks estimated the US had an estimated 200,000 bitcoins, worth around $17.8bn, and promised “full accounting” of the government’s digital asset holdings.
“There is no indication yet of how much, if any, would be acquired nor a timeline,” said Andrew O’Neill, digital assets managing director at S&P Global Ratings, adding that the move “is mainly symbolic”.
Washington’s embrace of crypto comes as the White House is hosting investors and the heads of big US companies including Brian Armstrong of Coinbase and Michael Saylor of Strategy at a summit on Friday, highlighting its acceptance of the industry.
