Bitcoin Plunges as Trump Establishes Strategic Bitcoin Reserve—Here’s Why

• The Bitcoin reserve will be funded with approximately 200,000 BTC seized through criminal and civil asset forfeitures, without imposing costs on taxpayers.
• Trump’s evolving stance on cryptocurrency now includes hosting a White House “Crypto Summit” and establishing a Digital Asset Stockpile.

Bitcoin’s price plummeted sharply after President Donald Trump’s key policy action: an executive order to establish a government-owned Strategic BTC Reserve. While the action represented a milestone towards institutional adoption, market expectations failed to materialize, prompting a selloff.

Bitcoin Price Falls After Trump’s Announcement

The crypto market responded negatively to the news, with Bitcoin falling as much as 5.7% once the order had been signed. A few hours after the announcement, the BTC price had dropped to $84,707. Market analysts cited a lack of clarity about how the reserve would be funded beyond the BTC already in the hands of the U.S. government.

The Kobeissi Letter, a popular financial newsletter, weighed in on the announcement. They wrote on X, “No explanation on how the reserve will be funded aside from Bitcoin already held by the US. It’s simply a promise to not sell what they currently hold.” The newsletter went on to characterize the situation as a definite “sell the news” situation because it wasn’t the “reserve” that crypto bulls had expected.

For further context, White House crypto and artificial intelligence czar David Sacks stated that the reserve would be made up of Bitcoin taken through criminal and civil asset forfeiture cases, as mentioned in our last news piece. Sacks posted on X:

The Reserve will be capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings. This means it will not cost taxpayers a dime,

The U.S. government has about 200,000 BTC in its possession that has been seized in the past. According to this new policy, those assets will be maintained as a strategic reserve instead of being sold. “The US 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 said.

Missed Opportunities & Market Reaction

The executive order also requests a complete audit of government Bitcoin reserves. As Sacks noted, during the last ten years, some 195,000 BTC were sold for only $366 million—a figure now worth an estimated $17 billion if retained.

Whereas the purchase order primes the pump for future deals, it doesn’t see immediate government buying. Rather, it leaves room for the Treasury and Commerce Departments to pursue “budget-neutral” ways of procuring more Bitcoin. Perhaps this failure to act in the near term had something to do with disappointing investors and causing the price to fall.

Trump’s BTC opinions have altered significantly over time. Having originally dismissed the digital currency as a “scam,” he now stands as one of its firmest political defenders. His regime has actively revoked limiting regulations and urged Congress to enact crypto-beneficial legislation.

As part of this crypto-friendly initiative, Trump is hosting business leaders for a “Crypto Summit” at the White House on Friday, as highlighted by CNF. The executive order also establishes a standalone U.S. Digital Asset Stockpile to store other seized cryptocurrencies like XRP, Solana, and Cardano.