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Trump’s Reversal on U.S. Crypto Reserve Sparks Market Plunge
Major tokens such as XRP, dogecoin (DOGE) and Cardano (ADA) plummeted as much as 9% in the past 24 hours after President Donald Trump dashed hopes of a diversified U.S. strategic crypto reserve.
Trump’s Announcement
Late Thursday, Trump directed his administration to establish a Bitcoin Strategic Reserve to hold bitcoin (BTC) previously seized by the government with an additional “crypto stockpile” of other assets.
Assets for the non-bitcoin stockpile will be any crypto that the government otherwise seizes.
Market Reaction
That reversed days of bullish momentum fueled by Trump’s earlier comments, which had included tokens XRP, ADA, ether (ETH) and Solana’s SOL — dousing hopes of buying pressure on all these assets using taxpayer money.
DOGE spiked as much as 12% earlier in the week as asset manager Bitwise filed a 19-B for an exchange-traded fund (ETF) holding the token, with isolated hopes of it being included in the strategic reserve among some traders.
Bitcoin, the centerpiece of Trump’s plan, wasn’t immune, dipping 4.5% from a 24-hour high above $93,000 to under $88,000. The broad-based CoinDesk 20 (CD20), a liquid index tracking the largest tokens by market capitalization, fell 5%, while smaller altcoins dropped as much as 10%.
Consequences
The slide triggered over $400 million in liquidations on bullish bets in crypto futures, with a bulk of that stemming from BTC-tracked products at $230 million.
Looking Ahead
Traders now look to the White House Crypto Summit scheduled in U.S. morning hours on March 7, but don’t hold high hopes for what’s to come.
“Traders have lowered expectations since the strategic reserve announcement failed to live up to expectations,” said Nick Ruck, director at LVRG Research, in a Telegram message. “Trump hasn’t promised anything substantial for Friday’s summit that could reverse the impact of the trade wars, so there is still a risk-off sentiment.”
“Traders hold some hope for surprise announcements between Trump and individual blockchain companies, as numerous industry leaders and key government department heads will be in attendance,” Ruck added.
Conclusion
The sudden reversal of Trump’s plan to establish a U.S. crypto reserve has sent shockwaves through the market, with major tokens like XRP, DOGE, and ADA plummeting in value. The move has sparked concerns about the future of the crypto market and the potential for government intervention.
FAQs
What was the original plan for the U.S. crypto reserve?
Originally, the plan was to establish a Bitcoin Strategic Reserve to hold bitcoin (BTC) previously seized by the government with an additional “crypto stockpile” of other assets.
Why did the plan change?
The plan was changed due to concerns about the potential impact on the market and the lack of clarity around the process for selecting the assets to be included in the reserve.
What are the implications for the crypto market?
The sudden reversal of the plan has sent shockwaves through the market, with major tokens like XRP, DOGE, and ADA plummeting in value. The move has sparked concerns about the future of the crypto market and the potential for government intervention.
What is the White House Crypto Summit?
The White House Crypto Summit is a scheduled event where industry leaders and government officials will discuss the future of the crypto market and potential regulatory frameworks.
What are the expectations for the summit?
Traders are not holding high hopes for the summit, with some expecting it to be a repeat of the strategic reserve announcement, which failed to live up to expectations. Others hold out hope for surprise announcements or revelations that could reverse the impact of the trade wars and stabilize the market.
