The US Cryptocurrency Market Under the Trump Administration: Strategic Reserves and Regulatory Outlook

The US Cryptocurrency Market Under the Trump Administration: Strategic Reserves and Regulatory OutlookIn 2024, President Trump signed an executive order establishing a strategic Bitcoin reserve and hosted a cryptocurrency summit at the White House. However, the actual impact of these initiatives fell short of market expectations, causing market volatility

The US Cryptocurrency Market Under the Trump Administration: Strategic Reserves and Regulatory Outlook

In 2024, President Trump signed an executive order establishing a strategic Bitcoin reserve and hosted a cryptocurrency summit at the White House. However, the actual impact of these initiatives fell short of market expectations, causing market volatility. The executive order primarily fulfilled Trump's campaign promise not to sell government-held cryptocurrencies, implying limited incremental federal funds entering the cryptocurrency market in the short term. While the White House summits agenda deviated somewhat from market expectations, its in-depth discussion of regulatory responsibilities and stablecoin legislation signaled a clearer government stance on the sector.

Although these initiatives didn't fully meet market expectations, the launch of the federal cryptocurrency reserve plan spurred similar state-level plans previously on hold. Under a relatively relaxed regulatory environment, we anticipate continued growth potential for the US cryptocurrency industry during Trumps term. However, significant market volatility and consolidation are expected until clarity emerges on several key factors: the Treasury Department's operational plan for the strategic Bitcoin reserve; legislation clarifying cryptocurrency regulatory responsibilities; and further clarification of the Federal Reserve's monetary policy.

I. Strategic Bitcoin Reserve Plan: Expectations vs. Reality

The executive order signed in 2024 officially launched the strategic Bitcoin reserve plan, aiming to leverage cryptocurrencies held by the federal government for capital operations. Currently, government-held cryptocurrencies are dispersed across various departments, including the Treasury and Justice Departments. Trump's order mandates a comprehensive inventory and accounting of all federally held digital assets. According to on-chain data tracking by Arkham Exchange, the US government holds approximately 198,000 Bitcoins, representing a staggering 98% of Bitcoin held on the network.

The executive order explicitly commits to not selling the reserved cryptocurrencies, making the reserve mechanism akin to a "digital Fort Knox" for cryptocurrencies. Furthermore, it directs the Treasury and Commerce Departments to develop neutral budget strategies to acquire more cryptocurrency assets without increasing the taxpayer burden.

Trump's strategic Bitcoin reserve plan closely aligns with his campaign promise not to sell government-held cryptocurrency assets. Therefore, given the ongoing accumulation of US government debt, we believe the likelihood of additional federal funds flowing into the cryptocurrency market in the short term is low. Further implementation details are expected in a report due from the Treasury Department within 60 days of the executive order, detailing the specific plan for establishing and managing the strategic Bitcoin reserve and US digital asset reserves.

While the plan helped alleviate concerns about BTC sell pressure, its actual content fell short of market expectations. On March 7th, the S&P Cryptocurrency Index experienced a 2.0% daily drop, with Bitcoin's decline reaching 3.5%, and Bitcoin ETFs seeing net outflows of $370 million. This market reaction suggests that participants remain cautious about the plan's effectiveness.

II. White House Cryptocurrency Summit: Regulatory Clarity

The first-ever White House closed-door cryptocurrency meeting during the Trump administration brought together government officials and leading figures from US cryptocurrency exchanges, venture capital firms, and blockchain protocol development. Key discussion points included reducing regulatory burdens on cryptocurrency businesses, including pausing or withdrawing lawsuits, and creating a clearer regulatory framework. As discussed in our previous report, "Trump's Re-election: A New Chapter in US Cryptocurrency Regulation," clarifying regulatory responsibilities is paramount for future regulatory relaxation.

The summit also explored the potential of stablecoins in expanding the international dominance of the US dollar. Promoting stablecoin development could enhance the ease of using the dollar in digital transactions, allowing investors to indirectly hold and use USD through stablecoins for cross-border remittances or decentralized finance (DeFi) applications. However, the "stability" of stablecoins remains a core market concern. Trump pledged to promote clear stablecoin legislation before Congress' August recess.

Although the summit's agenda differed somewhat from market expectations, the discussion of core issues marked a shift from ambiguity to clarity in the government's approach to the cryptocurrency industry.

III. US Cryptocurrency Regulatory Easing and Growth Potential

Despite the strategic Bitcoin reserve plan falling short of expectations, previously stalled state-level cryptocurrency reserve plans may gain momentum under the federal plan's guidance. While we don't anticipate significant federal investment in cryptocurrencies in the short term, progress on state-level initiatives could still bring increased funding to the market.

Discussions at the summit regarding future regulatory frameworks will positively impact the industry's long-term development. Since Trump's re-election, regulatory attitudes have eased, with the SEC withdrawing lawsuits against major players like Coinbase and Uniswap. Therefore, we expect the US cryptocurrency industry to maintain growth potential during his term.

IV. Market Outlook and Investment Recommendations

Until these key policies are clarified, the US cryptocurrency market will likely experience considerable volatility and consolidation. Once clarity emerges, we recommend focusing on:

1. US-based centralized cryptocurrency exchanges with easing regulations and increasing industry standards: Improved regulation and standardization will enhance the stability and security of these exchanges, attracting more investors.

2. US utility sectors boosted by increased cryptocurrency mining driven by the "world cryptocurrency capital" vision: If the US aims to become a global cryptocurrency hub, mining activity will increase, positively impacting related utility sectors (e.g., power supply).

V. Risk Factors

Investors should be aware of the following potential risks:

1. Intensification of US-global trade friction;

2. Unexpectedly low Federal Reserve rate cuts or unexpectedly tight monetary policy;

3. Liquidity crisis in the US financial system;

4. Security incidents due to potential technical vulnerabilities in blockchain platforms;

5. Unexpected tightening of cryptocurrency regulations.

Disclaimer: This excerpt is from Citic Securities Research Institute's report, "US Cryptocurrency Industry ReviewStrategic Bitcoin Reserve Plan Falls Short of Expectations, Regulatory Easing Still Needs Further Advancement," published on March 8, 2025. For complete analysis (including risk disclosures), please refer to the full report. In case of ambiguity arising from this excerpt, the complete report on the date of publication shall prevail. This material is for informational purposes only and does not constitute investment advice. Investors should make independent judgments based on their own circumstances and bear the corresponding investment risks. Citic Securities assumes no responsibility for any losses incurred from using this material. (Subsequent content is omitted as it is a repetition of the disclaimer.)