Source: The Economic Times
Overview-Trump’s announcement on 2nd March 2025 (Sunday)
On Sunday, United States President Donald Trump announced that his government would create a US Strategic Crypto Reserve, which includes five cryptocurrencies. In his statement, he also added that he would make the US “the crypto capital of the world”.
In his statement on Truth Social Network, he also stated that the inauguration that was supposed to be done in January 2025, is pressing forward with the creation of the crypto reserve and he will soon fulfil the promise to make the US Strategic Crypto Reserve that he made to made to crypto lobbyists during his election campaign.
What was the result of Trump’s announcement?
Within hours of the announcement, the Bitcoin price spiked by 10%, Ether by 13%, and tokens like Cardano and Solana also made substantial gains.
The tokens mentioned in Trump’s announcement are all among the top eights cryptocurrencies and others which were absent from this list of top gain were Tether and USDC, along with Binance’s token BNB.
The stockpile of other assets (rather than Bitcoin & cryptocurrency)
The U.S. already has a stockpile of many other things like military and medical equipment. These reserves or stockpiles were made to get help in the time of need. The words “stockpile” and “reserve” are often used interchangeably.
If the meaning of “reserve” refers to the “government taking” then stockpile is known to be the reserve of assets. The government plays an active role in managing the assets of a reserve rather than a stockpile. The things are being compared because initially, Donald Trump referred to making a stockpile of bitcoin and other cryptocurrencies but not to making a “crypto strategic reserve”.
If the USA had the “crypto strategic reserve” under the federal government, this would mean that the government could easily sell or buy cryptocurrencies. Additionally, the citizens would also follow the same. Many economists and supporters say that the profit from the “US Strategic Crypto Reserve Proposal” would preferably reduce the debut of the nation in large amounts. The critics also argue that bitcoin is one of the most volatile and speculative investments. Others like Eswar Prasad, a professor of trade policy at Cornell University who wrote the book The Future of Money, say that Bitcoin’s stockpile would be more like the speculative asset - gold.
Stockpile Of Bitcoin Available To The USA Government
As a part of criminal seizures, the US government has the holding of around 200,000 Bitcoin tokens. The stockpile of this much bitcoin is valued at around $17 billion (as of 3rd March 2025-Monday). The reserve can also hold other cryptocurrencies like Ether, XRP, Solana, and Cadano.
Bitcoin is one of the oldest and the most valuable cryptocurrency in the market. After the announcement of the president, Donald Trump, nearly all five cryptocurrencies and their value spiked. However, the value declined the next day. It is for this reason, that many prominent crypto backers say that there should not be the reserve of other cryptocurrencies rather than Bitcoin.
On the other hand, Coinbase CEO Brian Armstrong said on X that making the reserve of only Bitcoin would simply be the “best option” and it would be just the clear story as successor to gold.
Will This Strategy Of US Strategic Crypto Reserve Work In the Long Run?
Since the time, Donald Trump announced the US Strategic Crypto Reserve proposal, the market has been facing a crucial phase. Though this and all previous announcements show that the government is taking the decision seriously, it has also raised questions for the market’s future.
There are mixed experts and their mixed suggestions are coming in the favor of making crypto reserve. The experts are divided – some are in favor of the step saying that it would stabilize the market and others worry about the short-term volatility of the currency.
As per the plan, Donald Trump is supposed to put the Bitcoin confiscated from criminal seizures in the reserve. Some experts believe that this reserve will reduce the pressure of selling bitcoin and it would become a more trusted asset. Others say that the government would have limited chances of buying new bitcoin and this would affect the prices and would limit the bitcoin price or value.
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