On March 6, 2025, U.S. President Donald Trump signed an executive order officially establishing a Bitcoin (BTC) Strategic Reserve, aiming to strengthen the country’s leadership in the digital asset sector. However, despite the significance of this move, the crypto market remained unimpressed, with Bitcoin prices dropping over 5% following the announcement.
Structure and Purpose of the Bitcoin Strategic Reserve
According to David Sacks, the White House’s Cryptocurrency Affairs Commissioner, the reserve will be comprised of Bitcoin seized through criminal and civil asset forfeiture procedures. Sacks stated that Bitcoin will serve as a “digital gold” reserve, enhancing financial security and stability.
Currently, the U.S. government holds approximately 200,000 Bitcoins, valued at around $21 billion. Previously, these assets were typically auctioned off, but this new policy signals a shift toward long-term retention as a hedge against future economic uncertainties.
Market Reaction: Price Drop and Investor Sentiment
Despite the long-term strategic implications, the market’s immediate reaction was negative. Following the announcement, Bitcoin prices dropped 5%, falling below $85,000 before recovering slightly to $88,000.
Charles Edwards, founder of the hedge fund Capriole Investments, commented, “Investors were expecting actual government purchases rather than just a shift in classification. Without immediate buying pressure, the market remains unmoved.”
Similarly, Steven Lubka, a senior analyst at Swan Bitcoin, noted, “While this policy is a step in the right direction, the market was looking for more direct bullish catalysts, such as large-scale institutional or governmental acquisitions.”
Long-Term Impact: Policy Shift and Market Outlook
Although the short-term market response was lackluster, the establishment of a Bitcoin Strategic Reserve could have significant long-term effects on the crypto market.
Matt Hougan, Chief Investment Officer at a leading crypto asset management firm, stated, “This policy reduces the likelihood of future regulatory crackdowns on Bitcoin in the U.S. and could inspire other nations to consider similar strategic reserves.”
However, challenges remain. A recent report from JPMorgan highlights that due to ongoing global economic uncertainties and weak demand, Bitcoin may struggle to break past the $90,000 resistance level in the near term.
Conclusion: A Positive Policy Shift Amid Market Caution
The U.S. government’s decision to establish a Bitcoin Strategic Reserve marks a pivotal shift in its approach to cryptocurrency. However, the market’s cautious response suggests that traders and investors are waiting for more concrete developments. As policymakers implement this initiative, market participants will need to monitor broader economic factors and regulatory actions to strategize effectively.
