- Cryptocurrency prices declined after President Trump signed an executive order establishing a U.S. Bitcoin reserve, with BTC dropping 3% to $87,586.86.
- The reserve will utilize existing government-held Bitcoin (approximately 198,000 BTC worth $17 billion) from law enforcement seizures rather than new purchases.
- Investors sold off assets upon learning the government has no immediate plans to purchase additional Bitcoin, contradicting earlier market speculation.
Cryptocurrency markets retreated Thursday evening following President Donald Trump‘s official establishment of a strategic Bitcoin reserve and digital asset stockpile. Bitcoin fell 3% to $87,586.86, according to Coin Metrics data, after briefly plummeting to $84,688.13 when the announcement broke, disappointing investors who had anticipated more aggressive government purchasing plans.
The price action reflected broader market reactions as other cryptocurrencies that had rallied earlier in the week also experienced declines. Ether dropped 2% to $2,184.08, while XRP and Solana’s SOL token fell by 1% and 3% respectively. Cardano‘s ADA token suffered the steepest decline, tumbling 13% in the aftermath of the announcement.
David Sacks, White House cryptocurrency and AI advisor, clarified details of the initiative on X, explaining that the Bitcoin reserve would consist exclusively of cryptocurrency already held by the U.S. government from law enforcement actions. “This will not cost taxpayers anything,” Sacks stated. According to data from Arkham, the U.S. government currently possesses over 198,000 bitcoins valued at approximately $17 billion.
The secondary “digital asset stockpile” will include cryptocurrencies beyond Bitcoin that have been obtained through civil or criminal proceedings. Sacks emphasized that the government wouldn’t actively acquire additional assets beyond those acquired through forfeitures. Arkham data indicates the government currently holds around 56 ether tokens worth nearly $119 million, with no reported holdings of XRP, Solana, or Cardano tokens.
Market participants responded with sell-offs upon learning that immediate government Bitcoin purchases were not part of the plan, especially against the backdrop of ongoing weakness in equity markets.
“This is positive news, but not what the market was looking for in the short term,” said Steven Lubka, head of private clients and family offices at Swan Bitcoin. “There’s a sentiment that folks were expecting immediate buying pressure.”
However, Sacks did note that Treasury and Commerce secretaries have been authorized to develop “budget-neutral strategies for acquiring additional bitcoin” that wouldn’t burden American taxpayers, though no specific plans for expanding the crypto stockpile beyond current holdings were announced.
The announcement arrived shortly before the inaugural White House Crypto Summit and following Trump’s campaign promises to the cryptocurrency community regarding the establishment of a Bitcoin reserve.
This week’s crypto market has experienced volatility due to broader economic concerns including tariff disputes and inflation worries, which have overshadowed speculative enthusiasm about the reserve. Earlier in the week, JPMorgan expressed doubt about significant near-term appreciation in crypto prices, citing economic uncertainties and waning demand.
Bitcoin briefly touched the psychologically important $90,000 mark earlier this week before retreating. Analysts caution that without sustained trading above this threshold, Bitcoin remains vulnerable to a potential correction toward the $70,000 level.
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