Trump Establishes Strategic Bitcoin Reserve Amid Market Uncertainty

WASHINGTON, March 7 (Reuters) – President Donald Trump signed an executive order on Thursday to create a Strategic Bitcoin Reserve, solidifying the federal government’s first formal recognition of bitcoin as a reserve asset. This action is a significant step toward the mainstream acceptance of cryptocurrencies, aligning with Trump’s strategy to engage with the industry ahead of a White House summit scheduled for Friday.

The reserve, capitalized with bitcoin seized through criminal and civil asset forfeiture, is intended to enhance the government’s role in the digital currency space. White House crypto czar David Sacks announced via social media that the reserve would include an estimated 200,000 bitcoins, equivalent to about $17.5 billion at current market rates.

“The U.S. will not sell any bitcoin deposited into the Reserve. It will be kept as a store of value. The Reserve is like a digital Fort Knox for the cryptocurrency often called ‘digital gold,’” Sacks stated.

The executive order also outlines the establishment of a U.S. Digital Asset Stockpile, which will hold other cryptocurrencies seized by the federal government. However, Sacks emphasized that the government would not make additional purchases beyond those obtained through forfeiture.

This strategic reserve comes after bitcoin’s price fluctuated dramatically, dipping approximately 5% to $85,000 following the announcement before rebounding to about $89,200 during early European trading. Crypto enthusiasts had anticipated a more robust strategy involving the direct purchase of bitcoin by the government.

Andrew O'Neill, digital assets managing director at S&P Global Ratings, described the order’s significance as mostly symbolic, noting, “The reserve will include only Bitcoin already owned by the U.S. government…there is no indication yet of how much, if any, would be acquired nor a timeline.” He indicated this could be a missed opportunity for a broader strategy.

Charles Edwards, founder of bitcoin-focused hedge fund Capriole Investments, expressed disappointment: “This is just a fancy title for Bitcoin holdings that already existed with the government. This is a pig in lipstick.” His critique reflects broader skepticism among investors looking for more active government involvement in the crypto market.

Despite the disappointment, some proponents believe the reserve could help manage the U.S. national debt by capitalizing on future price increases in cryptocurrency assets. Sacks acknowledged the government’s prior sales of about 195,000 bitcoins over the last decade, resulting in significant potential losses that could have totaled $17 billion.

As the cryptocurrency landscape continues to evolve under Trump’s administration, concerns about regulatory clarity and market volatility loom large. Proponents argue that establishing this reserve might be beneficial, yet critics are wary of potential favoritism and the lack of transparency in asset selection.

Attendees at the upcoming crypto summit expect Trump to elaborate on the reserve’s function and the overall strategy for integrating digital assets into the U.S. economic framework. The industry remains on high alert for developments, particularly as many crypto investors seek guidance from the federal government.

Trump’s escalating support for cryptocurrencies, including his recent approval of a range of tokens to be included in the U.S. Digital Asset Stockpile—such as Ethereum, XRP, Solana, and Cardano—suggests a more comprehensive approach that may evolve as the cryptocurrency market matures.