Bitcoin Demand in Contraction After Trump’s Crypto Reserve Announcement: CryptoQuant
This week in the cryptocurrency landscape, Bitcoin (BTC) and the broader market experienced a momentary surge, driven by headlines surrounding the establishment of a United States Strategic Crypto Reserve. However, this boost was short-lived as the market quickly reverted to a state of stagnation and overall negative movement.
According to a recent report from market analytics platform CryptoQuant, actual spot demand for Bitcoin continues to dwindle, with the apparent demand following a noticeable downtrend since the premium market activity witnessed in late 2024. This contraction raises concerns about the sustainability of any price rallies in the near future.
### “Trump-n-Dump” Phenomenon
A notable trend described by CryptoQuant, termed the “Trump-n-Dump,” emerged following a statement from former President Trump regarding the U.S. government’s plans for a strategic digital asset reserve. On March 2, Trump directed the Presidential Working Group to establish a reserve that includes leading cryptocurrencies like BTC, Ether (ETH), Solana (SOL), Ripple (XRP), and Cardano (ADA), aiming to elevate the United States to a prominent position in the global crypto landscape.
Initially, this announcement spurred impressive gains across the selected assets—BTC saw a 14% increase, ETH jumped by 20%, XRP skyrocketed by 40%, SOL surged more than 20%, and ADA shot up by at least 60%. However, by the following Monday, all these digital assets had relinquished their gains, returning to pre-announcement levels as traders quickly offloaded assets.
The inflow of Bitcoin into trading platforms surged dramatically, jumping from a range of 500-1,000 per hour before the announcement to 6,739 by March 3. Ethereum inflows also experienced a spike, reaching approximately 300,000. Additionally, a staggering 2 billion XRP flowed into exchanges across that weekend, with trading platforms reporting hourly inflows of up to 193 million XRP, largely from transactions involving whales.
### Increasing Corrections in Crypto Assets
The substantial inflows serve as an indication of traders capitalizing on the brief price spike, reflecting a broader trend of selling into upward momentum. Currently, key cryptocurrencies, including BTC, ETH, SOL, XRP, and ADA are down by at least 3% daily according to data from CoinMarketCap.
These assets further exhibited significant corrections following Trump’s executive order on March 6 that formalized the creation of a Strategic Bitcoin Reserve, which will include assets forfeited in legal procedures. The order stipulates that the U.S. government will not engage in purchasing additional cryptocurrencies, focusing solely on assets acquired through forfeiture.
As the volatility in the crypto market persists, CryptoQuant emphasizes the critical need for genuine demand for Bitcoin if the cryptocurrency is to sustain any upward price action, regardless of bullish governmental pronouncements.
