Trump's Order on the Federal Reserve's Bitcoin Does Not Generate Enthusiasm in the Crypto Market.
A founder of a cryptocurrency investment fund compared the current situation by saying it’s like a "pig with lipstick." On Friday, the value of bitcoin had dropped nearly 20 percent from its all-time high reached in January.
The instability of stocks in the U.S., coupled with a decline in consumer confidence and increasing hints of a potential recession, marks President Donald Trump's second term as a complicated and volatile period. Amid this uncertainty, the cryptocurrency industry was hoping that the executive order announced on Thursday, which establishes a federal Bitcoin reserve, would boost the blockchain ecosystem. However, the value of Bitcoin has experienced a sharp decline, and the founder of a cryptocurrency-focused hedge fund called the order “the most disappointing outcome we could have expected for this week.”
After Trump announced in January his intention to sign an executive order to establish a cryptocurrency stockpile, the market reacted with optimism, and cryptocurrency prices rose. Bitcoin reached an all-time high of over $109,000 in January, after breaking the $100,000 barrier for the first time in early December. However, on Friday, following the release of the order, Bitcoin suffered a decline of approximately five percent, hitting a low of $85,000. Despite a slight recovery at the time of publication, it remained around $88,000, which is nearly 20 percent lower than its January peak.
A significant part of this tepid reaction is due to the reserve utilizing assets that the government already possessed through confiscations or seizures of civil assets. While the decree leaves open the possibility of future government purchases of Bitcoin, David Sacks, the cryptocurrency lead at the White House, clarified that strategies for acquiring additional Bitcoin are only authorized as long as they do not incur additional costs for U.S. taxpayers. This was not what the crypto community expected, and Charles Edwards, founder of Capriole Investments, expressed his dissatisfaction on social media, describing the order as “a fancy title for Bitcoin holdings that already existed.”
Additionally, the executive order also contemplates a “U.S. Digital Assets Stockpile” that will include other crypto tokens such as Ether, XRP, Solana, and Cardano. A summit of crypto industry executives is taking place at the White House, where future regulation will be discussed among other topics. One of the attendees is Brian Armstrong, CEO of Coinbase, one of the companies recently favored by Trump's SEC after the dismissal of several compliance cases.
Analysts suggest that the market needs clearer signals to regain confidence, such as favorable regulatory policies for cryptocurrencies or indications that the U.S. Federal Reserve plans to cut interest rates. During his 2024 campaign, Trump reached out to the crypto industry by promising to create a federal cryptocurrency reserve and make the U.S. "the crypto capital of the planet." Additionally, he has faced criticism due to his investment in cryptocurrencies, raising concerns about potential conflicts of interest, as he and his wife Melania own memecoins that have significantly declined from their all-time highs. He also has a stake in the platform World Liberty Financial, which reportedly purchased over $20 million in cryptocurrencies prior to the summit at the White House.
