Cryptocurrency Market Decline Following Trump’s Bitcoin Reserve Plan
President Trump’s executive order for a U.S. bitcoin reserve has resulted in a decline in cryptocurrency prices. Bitcoin fell by 3%, and other currencies like Ether and Cardano also experienced losses. David Sacks clarified that the reserve will consist of seized bitcoins, with no additional purchases planned. Investor sentiment remains low amid broader economic uncertainty, with warnings of potential larger pullbacks in cryptocurrency values.
Cryptocurrencies experienced a significant decline on Thursday evening following President Donald Trump’s executive order to establish a strategic bitcoin reserve for the United States. The price of bitcoin decreased by approximately 3%, landing at $87,586.86, with a temporary drop to $84,688.13 shortly after the announcement. Other cryptocurrencies, including Ether, XRP, and Solana’s SOL token, also faced losses, while Cardano’s ADA token saw a steep decline of 13%.
David Sacks, the White House’s crypto and AI czar, clarified in a post that the proposed bitcoin reserve would consist of bitcoins already owned by the U.S. government, specifically those seized through law enforcement activities, ensuring that taxpayers would incur no costs. Currently, the U.S. government holds over 198,000 bitcoins valued at around $17 billion, according to Arkham data. Additionally, the reserve will include other digital assets forfeited in legal processes, while no new acquisitions will be made beyond these seizures.
Investor sentiment turned negative with the announcement of no immediate plans for additional bitcoin purchases, leading to a sell-off against a backdrop of declining equity markets. Steven Lubka from Swan Bitcoin remarked that while the news is good, it is not what the market desired in the short term, as many hoped for buying pressure soon after the order.
Sacks also noted that the Secretaries of Treasury and Commerce have the authority to create strategies for acquiring more bitcoin without affecting taxpayer funds. However, it was specified that no acquisitions would occur beyond existing forfeitures. The announcement followed a period of speculation and was timed just before the inaugural White House Crypto Summit, reflecting broader economic anxieties amidst a tariff war and inflation concerns.
The cryptocurrency market instability has been exacerbated by these economic factors, overshadowing the excitement surrounding the anticipated bitcoin reserve. Analysts from JPMorgan have expressed skepticism about significant upward movement in cryptocurrencies in the near term, citing economic uncertainty. Bitcoin had recently approached the critical $90,000 mark but current trends suggest it may be vulnerable to a retracement towards $70,000.
In summary, the recent executive order by President Trump regarding a U.S. bitcoin reserve has led to a notable downturn in cryptocurrency prices, fueled by investor disappointment over the lack of immediate purchases. The clarification that the reserve will solely consist of already seized assets has further contributed to a subdued market sentiment. Overall, ongoing economic challenges may continue to impede any substantial recovery in cryptocurrency values in the near future.
Original Source: www.cnbc.com
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