Market Tanks After Trump Signs Executive Order to Establish Strategic Bitcoin Reserve

On March 6, 2025, President Trump signed a pivotal Executive Order to create a Strategic Bitcoin Reserve, as announced by White House crypto czar David Sacks. This new initiative aims to capitalize on the approximately 200,000 BTC currently held by the federal government, primarily acquired through criminal and civil asset forfeiture. According to Sacks, the reserve will serve as a store of value akin to “digital Fort Knox,” emphasizing that none of the Bitcoin held in this reserve will be sold.

The Executive Order represents a significant shift in how the U.S. government approaches its cryptocurrency assets. Sacks noted the financial implications of past decisions, stating that the federal government’s premature sales of Bitcoin have cost taxpayers over $17 billion in lost value. The order is designed to maximize the value of existing holdings rather than engaging in further acquisitions of cryptocurrencies beyond those obtained via forfeiture.

In a bid to foster transparency, the Executive Order mandates a complete accounting of the federal government’s digital asset holdings. This includes a digital asset stockpile for other cryptocurrencies, although Sacks clarified that this will not extend to acquiring any additional assets, such as Ethereum, XRP, Solana, or Cardano, which were mentioned by Trump earlier.

Despite the optimism surrounding the establishment of the Strategic Bitcoin Reserve, the announcement has been a catalyst for a significant downturn in the crypto market. Following the news, the total market capitalization plummeted by over $200 billion, reflecting a 5% decline and bringing total capitalization back below $3 trillion. Bitcoin itself witnessed a rapid drop, falling from around $90,000 to a low of $85,000 within a short period before partially recovering. Other cryptocurrencies, particularly XRP, Solana, and Cardano, also experienced sharp declines, underscoring market skepticism regarding the government’s stockpiling strategy.

This initiative, while aimed at creating a robust framework for the U.S. government’s digital assets, has drawn mixed reactions from industry insiders. Analysts have voiced concerns about the long-term implications for the crypto market and the perception of government involvement in digital currencies, suggesting that such measures may stifle innovation and confidence among cryptocurrency investors. The future of the Strategic Bitcoin Reserve will hinge on its implementation and the government’s ability to navigate the volatile landscape of digital assets.