Donald Trump’s executive order confirming the establishment of a strategic bitcoin reserve sent cryptocurrency prices tumbling on Thursday night after it became clear the government was not actually planning to buy any bitcoin itself.
Bitcoin—the original cryptocurrency and the world’s largest—had been trading at around $90,000 before the White House announcement and dropped by almost 6 percent, before regaining around half its losses.
The decline extended across the broader crypto market, with all top 10 cryptocurrencies—including ethereum and XRP—experiencing sharp declines simultaneously, Bitcoin News reported.
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White House crypto czar David Sacks announced the move in a post on X. The reserve will be capitalized with bitcoin owned by the federal government that have been forfeited as part of criminal or civil asset forfeiture proceedings, he said.
“This means it will not cost taxpayers a dime,” said Sacks, adding that the that the U.S. will retain all bitcoin in the reserve as an asset and has no plans to sell any.
“The Reserve is like a digital Fort Knox for the cryptocurrency often called ‘digital gold.’” The crypto czar added.
As well as the bitcoin reserve, a “digital asset stockpile” will be set up under the Treasury Department for other cryptocurrencies that have been forfeited.
Prices of the cryptocurrency fell as Sack’s announcement made clear that the U.S. government would not be buying Bitcoin and crypto investors hurriedly unwound their positions.
The decree mandates a comprehensive audit of the federal government’s cryptocurrency holdings, which Sacks estimates to include approximately 200,000 bitcoin, worth about $17 billion.
“Premature sales of bitcoin have already cost U.S. taxpayers over $17 billion in lost value. Now the federal government will have a strategy to maximize the value of its holdings,” Sacks said.
“I want to thank the President for his leadership and vision in supporting this cutting-edge technology and for his rapid execution in supporting the digital asset industry. His administration is truly moving at ‘tech speed.’,” he added.
Trump, once a crypto skeptic, has pledged to make the United States “the Crypto Capital of the World”, and is set to host key industry leaders at the White House’s first-ever crypto summit on Friday.
During his campaign last year, Trump promised to create a Bitcoin reserve, a move that fueled market optimism. In December, following his presidential victory, bitcoin surged past $100,000, setting a new all-time high.
