Bitcoin and Cryptocurrencies Drop After Trump's Crypto Reserve Announcement
Bitcoin and Cryptocurrencies Drop After Trump's Crypto Reserve Announcement
Bitcoin fell sharply on Friday, dropping as much as 6% to $84,864.3, after President Donald Trump revealed details of a newly established crypto reserve. The reserve, created through an executive order, will hold Bitcoin and other digital assets confiscated by the federal government in criminal and civil cases. However, it will not involve any government-funded purchases of cryptocurrencies, dampening hopes of market support.
Key Details of the Reserve
- No Government Purchases: The reserve will not include any new purchases of cryptocurrencies, contrary to earlier speculation that Trump might convince Congress to allocate funds for such purchases.
- Confiscated Assets: The Department of Justice currently holds around 200,000 Bitcoins, worth over $17 billion at current prices. These assets, along with others seized in legal proceedings, will form the basis of the reserve.
- No Future Sales: While the government will no longer sell its crypto holdings, the absence of new purchases signals limited government intervention in the market.
Market Reaction
- Bitcoin: Fell by as much as 6% following the announcement.
- Other Cryptocurrencies: Ether dropped 6%, while XRP, Solana (SOL), and Cardano (ADA) declined between 3.7% and 14%.
- Trump's Crypto List: The five cryptocurrencies listed by Trump last week—Bitcoin, Ether, Solana, Cardano, and XRP—all saw significant price drops.
Impact on Investor Sentiment
The announcement has sparked disappointment among investors who had hoped for government-backed purchases to bolster the crypto market. The lack of fresh purchases and reliance on confiscated assets has raised concerns about the reserve's ability to stabilize or support cryptocurrency prices.
This development highlights the ongoing volatility in the crypto market and the influence of government policies on digital asset valuations.
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