Crypto markets continue to plummet as traders analyze the impact of recent political and economic developments, particularly the new US trade tariffs and the Executive Order signed by Donald Trump to establish a Strategic Bitcoin Reserve.
Bitcoin and Ethereum on a downward trend
Bitcoin has fallen 4.8% in the last 24 hours and is trading at $81,729. Ethereum has lost as much as 8% and is hovering near the $2,000 mark – a level last seen in November 2023. Other cryptocurrencies such as Dogecoin are also seeing double-digit losses.
The price drop comes despite the positive news that Trump wants to introduce a Bitcoin reserve. According to QCP Capital, the negative reaction is due to the fact that no concrete funds have been allocated for the purchase of Bitcoin. While the order calls on the Treasury and Commerce Departments to develop strategies for acquiring Bitcoin, a direct purchase using government funds is not currently planned.
Strategic Bitcoin Reserve: A Milestone with Uncertainties
The Executive Order stipulates that the Bitcoin reserve will be built using seized holdings. However, it remains unclear how many of these BTC can ultimately be used for the reserve. The US government currently holds around 198,000 BTC worth around $16.1 billion. Some of these holdings come from funds seized from hacks and could potentially be returned to previous owners.
In addition, the order orders a 60-day review by the US Treasury Department to evaluate the legal and financial framework. Possible financing strategies include reallocating gold reserves or using the Exchange Stabilization Fund.
Market reactions and outlook
Although the introduction of a government Bitcoin reserve was generally received positively, current market movements show that investors are initially waiting for clear details. The combination of geopolitical uncertainty, trade tariffs and regulatory ambiguity has led to selling pressure in the short term.
A crucial point remains whether the US Congress will take legislative action to establish Bitcoin as a strategic asset in the long term. The “Bitcoin for America” event, organized by Senator Cynthia Lummis and the Bitcoin Policy Institute, will take place on March 11. Further political decisions could be made there.
Until then, uncertainty remains high and traders are closely monitoring how regulatory developments and economic conditions develop. Amid these uncertainties, Bitcoin remains an attractive asset in the long term, but is under pressure in the short term.
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