Trump's Announcement of a US Cryptocurrency Strategic Reserve Sends Shockwaves Through the Market: A Deep Dive and Analysis of Diverse Perspectives

Trump's Announcement of a US Cryptocurrency Strategic Reserve Sends Shockwaves Through the Market: A Deep Dive and Analysis of Diverse PerspectivesOn the evening of March 2nd, former US President Donald Trump announced on the social media platform X the establishment of a US cryptocurrency strategic reserve, including Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA). This news immediately sent shockwaves through the cryptocurrency market, causing a significant surge in the prices of the aforementioned cryptocurrencies and pushing the global digital currency market capitalization back above $3 trillion

Trump's Announcement of a US Cryptocurrency Strategic Reserve Sends Shockwaves Through the Market: A Deep Dive and Analysis of Diverse Perspectives

On the evening of March 2nd, former US President Donald Trump announced on the social media platform X the establishment of a US cryptocurrency strategic reserve, including Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA). This news immediately sent shockwaves through the cryptocurrency market, causing a significant surge in the prices of the aforementioned cryptocurrencies and pushing the global digital currency market capitalization back above $3 trillion. However, the plan has also sparked considerable debate and skepticism, which this article will analyze in detail.

Two messages posted by Trump on X clearly stated that, after years of suppression under the Biden administration, the US would elevate the status of the cryptocurrency industry. He indicated that his "Digital Asset Executive Order" directed a presidential task force to develop a strategic reserve including XRP, SOL, and ADA, vowing to make the US the world's cryptocurrency capital. "I will make America great again!" he wrote. He later added, "Obviously, BTC and ETH, along with other valuable cryptocurrencies, will be core to the reserve. I also like Bitcoin and Ethereum!"

David Sacks, the White House's AI and Cryptocurrency chief, subsequently responded, suggesting that the cryptocurrency reserve might include more valuable cryptocurrencies in the future. This fueled the market's recovery, significantly impacted by the Trump effect.

The news prompted a sharp rebound in Bitcoin's price, briefly exceeding $94,000 before settling near $92,900. ADA's price surged by over 70%, surpassing Dogecoin (DOGE) to become the eighth-largest cryptocurrency by market capitalization, reaching $1.06 with a 24-hour increase of 23.58%. XRP broke through $2.80. While Ethereum and Solana's gains were less dramatic, they still saw increases exceeding 10%, reversing their previous downward trend.

This market recovery seemingly shrugged off recent negative events, including the $1.5 billion theft from Bybit exchange on Saturday, the over $49 million stolen in the Infini contract attack, and the lingering negative impact of Trump's previous "trade wars."

However, a portion of the 499,000 ETH stolen by the Bybit hackers remains unlaundered. On-chain data analyst Yu Jin stated that these ETH might be laundered within the next day or two, with only 60,000 ETH (approximately $148 million) remaining. In the past 24 hours, the hackers have laundered 96,500 ETH.

Additionally, on-chain analyst Ai Yi monitored an "Hyperliquid 50x leveraged long position in BTC and ETH user" who had nearly liquidated their 88,510 ETH and 831.57 BTC long position, making a $6.83 million profit within 24 hours and withdrawing the principal and profits, totaling 12,850,000 USDC, to the Arbitrum network. While some questioned this as "insider trading," Coinbase executive Conor Grogan suggested the funds originated from phishing targeting Roobet, a crypto gambling platform. The user reportedly closed their position before Trump's second announcement about the BTC strategic reserve, missing out on tens of millions of dollars in potential profits, thereby refuting the insider trading accusations.

Trump is scheduled to host the first White House Cryptocurrency Summit on March 7th, bringing together industry leaders to discuss regulatory policies, stablecoin oversight, and Bitcoin's potential role in the US financial system. This summit will be a crucial test for the crypto market.

Market Reaction: A Mix of Support, Rational Analysis, and Opposition

Trump's "pumping" action garnered support from many in the crypto community. White House AI and Cryptocurrency chief David Sacks immediately voiced his support, aligning it with Trump's Executive Order 14178 issued a week prior, viewing it as Trump fulfilling his promise to make the US the "world's cryptocurrency capital." Eric Trump, the former president's son, lauded his father's action as "genius," urging traditional financial institutions to catch up. Consensys founder and Ethereum co-founder Joseph Lubin also expressed gratitude for Trump's "epic pump."

However, some offered rational analyses of Trump's inclusion of "altcoins" in the strategic reserve. Taproot Wizards founder Udi Wertheimer suggested it was a classic Trump negotiating tactic, requiring Congressional approval for a true reserve. He posited that Trump started with an outlandish proposal, allowing for later concessions. Binance co-founder CZ urged market calm, advising against over-analyzing, suggesting more "valuable cryptocurrencies" might be added over time and that other nations might follow suit. KOL gum speculated that Trump might add tokens like MOVE and ONTO, acquired by World Liberty Fi (WLFI), to the reserve.

Others expressed skepticism or disapproval. BitMEX co-founder Arthur Hayes deemed the "crypto reserve" mere talk, arguing the US government lacked the funds and would need Congressional approval to borrow money or revalue gold to make it a reality. A Bitwise strategy executive believed Trump underestimated the importance of a Bitcoin-focused strategic reserve. Crypto-skeptic economist Peter Schiff disagreed, advocating for a Bitcoin-only reserve. Jiang Jinze, head of Web3 research firm Muse Labs, argued that Trump's plan was less difficult than issuing new debt or selling gold to purchase crypto, but still unrealistic. Eliezer Ndinga, 21Shares' strategy director, believed the market reaction might be overly optimistic, noting Congressional approval and various complexities would make the process longer than anticipated. Alex Xu, a research partner at Mint Ventures, viewed Trump's emphasis on SOL, XRP, and ADA as "quid pro quo," stating that legislative adoption was impossible and that this approach would undermine the seriousness of a BTC-focused strategic reserve.

Conclusion

Trump's announcement of a US cryptocurrency strategic reserve triggered significant volatility in the crypto market and sparked widespread debate and controversy. While it provided a short-term boost to market confidence, its long-term impact remains uncertain. The plan's viability, and its influence on US cryptocurrency policy and the global crypto market, will be key areas of focus in the future. Congressional approval, funding sources, and asset allocation are substantial hurdles, making the process lengthy and challenging. The actual impact of Trump's move will ultimately be determined by time and market forces.