Trump's Announced Crypto Reserve Sends Bitcoin and Other Cryptos Soaring, Triggering Massive Liquidations

Trump's Announced Crypto Reserve Sends Bitcoin and Other Cryptos Soaring, Triggering Massive LiquidationsOn March 3rd, the global cryptocurrency market experienced a dramatic upheaval: Bitcoin and other cryptocurrencies surged, causing intense market volatility and significant losses for many investors. By 8:32 AM, Bitcoin's price had risen by over 9%, Ethereum by over 13%, and Cardano (ADA) by a staggering 75%

Trump's Announced Crypto Reserve Sends Bitcoin and Other Cryptos Soaring, Triggering Massive Liquidations

On March 3rd, the global cryptocurrency market experienced a dramatic upheaval: Bitcoin and other cryptocurrencies surged, causing intense market volatility and significant losses for many investors. By 8:32 AM, Bitcoin's price had risen by over 9%, Ethereum by over 13%, and Cardano (ADA) by a staggering 75%. Simultaneously, Coinglass data revealed that over 170,000 cryptocurrency contracts were liquidated in the past 24 hours, totaling approximately $800 million. This undeniably demonstrates the extreme volatility in market sentiment.

This price surge is closely linked to former US President Trump's recent announcement of a plan to include XRP, Solana (SOL), and Cardano (ADA) in a US cryptocurrency reserve.

According to the Futures Daily, Trump formally announced this plan late on March 2nd. This followed the signing of an executive order establishing a task force to study the feasibility of creating a national digital asset reserve and to develop a clear regulatory framework for the crypto industry. While Trump didn't specify any digital assets when signing the executive order, the move was widely interpreted as a response to the Biden administration's perceived "suppression" of the crypto industry.

Trump's proposed cryptocurrency reserve aims to boost the US digital asset industry and enhance its global competitiveness. The plan specifically highlights Ripple's XRP, Solana's SOL, and Cardano (ADA) as core components of the proposed reserve system. Reports suggest that as early as January, Trump planned to prioritize cryptocurrencies in national policy, proposing a strategic reserve comprising US-issued crypto assets and advocating for the appointment of a Securities and Exchange Commission (SEC) chair more favorable to the crypto industry. According to the Securities Times, citing foreign media, Trump will host the White House's first cryptocurrency summit on March 7th, further solidifying his positive stance on the industry.

Trump's actions significantly impacted market sentiment. Following the announcement of the cryptocurrency reserve plan, XRP, SOL, and ADA prices surged, and other major cryptocurrencies like Bitcoin also experienced substantial gains driven by positive sentiment. However, it's crucial to note that this dramatic price volatility came with immense risk, resulting in substantial losses for numerous investors.

It's worth recalling that last week, the cryptocurrency market underwent a panic sell-off. On February 26th, Bitcoin's price fell over 5% intraday, dipping below $84,000a nearly 20% drop from its all-time high of $100,000 in late January. Bitcoin CME futures contracts briefly fell to $82,625, the lowest point in nearly three months. This price decline led to the largest single-day outflow in the history of iShares Bitcoin Trust (IBIT), BlackRock's largest Bitcoin exchange-traded fund (ETF), with redemptions totaling $418 million on February 26th. Fidelity, Grayscale, and ARK Invest's Bitcoin funds also faced significant selling pressure, with daily outflows reaching tens or even hundreds of millions of dollars.

The Bitcoin sell-off resulted from a confluence of factors. The largest-ever cryptocurrency theft played a direct role in triggering the sell-off. On February 21st, Bybit, the world's second-largest cryptocurrency exchange, was hacked, with over 400,000 cryptocurrencies worth more than $1.5 billion transferred to unknown addresses. This event reignited market panic and intensified concerns about cryptocurrency security.

Furthermore, Bitcoin's price plunge coincided with a decline in risk assets, reflecting investor adjustments to expectations regarding the US macroeconomic environment and tech stocks. HashKey Group's chief analyst, Ding Zhaofei, pointed out that the recent Bitcoin price correction was primarily caused by a significant readjustment of the AI narrative sparked by Deepseek, leading to a revaluation of related tech stocks and a ripple effect impacting the digital currency market. With overall sentiment towards risk assets worsening, Bitcoin, as a high-risk asset, couldn't escape the downturn.

Ding Zhaofei further explained: "Additionally, the Federal Reserve's concerns about inflation persist, virtually pausing hopes for further interest rate cuts. The pessimistic market sentiment towards liquidity prospects intensified the selling pressure on Bitcoin. A lack of new capital inflow, coupled with expectations of tighter liquidity, caused Bitcoin and other crypto assets to collectively plummet."

In summary, the recent dramatic volatility in the cryptocurrency market is the result of a complex interplay of various factors. Trump's announced cryptocurrency reserve plan injected temporary optimism into the market, leading to a sharp price increase; however, the previous panic sell-off and macroeconomic uncertainties continue to pose significant challenges to the cryptocurrency market. The future trajectory of the cryptocurrency market requires close monitoring of macroeconomic conditions, regulatory policies, and market sentiment. This event once again reminds investors that participating in the cryptocurrency market requires caution, a thorough risk assessment, and rational investment strategies. Cryptocurrency markets are extremely volatile, and high returns often come with high risks. Investors should make careful decisions and avoid blindly following trends. Any investment decision should be based on thorough market research and risk assessment.