U.S. President Donald Trump signed an executive order Thursday to establish a strategic bitcoin (BTC) reserve that includes BTC seized by the U.S. government through law enforcement actions.

White House crypto and AI czar David Sacks said that the stockpile will also include other coins forfeited in criminal or civil proceedings, while stressing that no taxpayer money will be spent on acquiring BTC or other coins.

According to Arkham Intelligence, the U.S. government currently holds 198,000 bitcoins worth approximately $17.3 billion. Treating the same as a reserve essentially takes out over $17 billion in selling pressure from the market.

However, bitcoin extended losses, hitting lows near $84,700, reflecting investor disappointment over the lack of new BTC purchases for the U.S. government. Prices, however, have recovered to $87,600 at press time in hopes that Trump will announce a favorable crypto tax policy at Friday’s White House crypto summit.

Market Reaction

Market pundits had mixed reactions to the news. Here are some of their comments:

Valentin Fournier, Analyst at BRN

“The Executive Order has disappointed some investors, as it explicitly states that the government will not acquire additional assets beyond those obtained through forfeitures. This lack of a clear acquisition plan has created confusion, weighing on market sentiment and leading to a 4% daily decline in Bitcoin, Ethereum, and Solana.”

“Commerce Secretary Howard Lutnick has been authorized to develop a budget-neutral strategy for acquiring additional Bitcoin. Given Lutnick’s strong ties to Bitcoin through his involvement with MicroStrategy, this could signal a hidden accumulation strategy by the U.S. government, potentially igniting a parabolic rally.”

Dick Lo, CEO of Quant-driven Digital Assets Trading Firm TDX Strategies

“Initial disappointment as the market had built up high expectations leading up to the announcement. However, the news is unambiguous positive: It would have been unrealistic to expect new buying without a plan on how it would be funded; An important distinction has been made between Bitcoin and the rest of crypto, i.e. not a single dollar will be spent buying altcoins.”

“Potential further positive announcements to come from the Crypto Summit: more favorable tax treatment towards crypto.”

Andrew O’Neill, Digital Assets Managing Director, S&P Global Ratings

“The significance of this executive order is mainly symbolic, as it marks the first time bitcoin is formally recognized as a reserve asset of the United States government. Currently, the reserve will only include bitcoin already owned by the U.S. government, specifically BTC forfeited through criminal or civil procedures. The order commits to holding this BTC as a reserve asset without selling it.

“However, the order does contemplate the possibility of acquiring additional bitcoin for the reserve, provided it can be done in a budget-neutral manner. There is no indication yet of how much, if any, would be acquired nor a timeline. The order also clearly distinguishes between bitcoin and other digital assets, which will not be included in the reserve but rather, included in a separate ‘stockpile.’

Conclusion

The establishment of a strategic bitcoin reserve by the U.S. government marks a significant step forward in the country’s crypto market. While the initial reaction from the market was mixed, the long-term implications of this move are likely to be positive for the crypto community. As the government continues to develop its strategy for the reserve, it will be important to monitor its progress and its impact on the market.