Trump’s Support Won’t Save Cryptocurrency

In the first weekend of March, President Trump took to Truth Social to resurface his vision for a strategic crypto reserve, initially referencing the tokens XRP, Solana, and Cardano before hastily mentioning Bitcoin and Ether in a follow-up post.

In the immediate aftermath, Bitcoin rose 11.5% from $85,200 to $94,600, Ether rose nearly 4%, and XRP, Solana, and Cardano rose 16.2%, 11.8% and 46.7%, respectively.

But now, nearly a month later, those cryptocurrencies have given back their immediate gains and then some.

The critical flaw in the announcement (and the subsequent Executive Order) was the lack of a specific framework for building the reserve, most notably, how much would be acquired, how, and how quickly.

In the aftermath, comments from White House AI and Crypto Czar, David Sacks, alluded to building the reserve around cryptocurrency assets that had been seized as part of law enforcement efforts (rather than bought in the open market).

A deflating revelation for crypto enthusiasts to be sure.

But those comments don’t preclude the administration from taking an alternate route to a reserve, or building out a more robust reserve at a future point.

For instance, a Senate bill introduced in 2024, the BITCOIN Act, called for the U.S. government to establish a Bitcoin Purchase Program to “purchase not more than 200,000 Bitcoins per year over a 5-year period, for a total acquisition of 1,000,000 Bitcoins.”

The 1 million figure appears, on its face, to be arbitrary, as holding roughly 5% of the total circulating supply achieves nothing from a control or security standpoint but merely provides market exposure, functional holdings for some future use, or some level of endorsement of cryptocurrency as an asset class.

We also do not know if President Trump intends to mirror the Act’s scope.

In other words, the proposed reserves could be as little as the existing holdings (consistent with the Crypto Czar’s comments; just under $19 billion worth), the 1 million figure ($85 billion worth), or some number in between.

But, even should the White House elect to add to the government’s crypto holdings through market buys, it’s not likely to offer much momentum for the Bitcoin bulls.

To better understand why, it may be instructive to look at one of the government’s other strategic reserves, namely, gold.

The U.S. government currently holds 261 million troy ounces of gold, which it values at $42.22 per ounce.

Based on the current spot price of $3,050/ounce, those holdings are more accurately valued at $796 billion and represent 4% of the total global market cap of gold ($19.9 trillion).

Given Bitcoin’s total market cap of $1.7 trillion, a commensurate holding would be $68 billion, or about 800,000 tokens, not far off from the 1 million figure that has been previously floated.

A 4% stake of the five cryptocurrencies mentioned by President Trump would be as follows:

In each case, a 4% stake of the outstanding market cap of these tokens represents a day’s volume (or less) and could be acquired without meaningfully moving the market, especially if, as outlined in the BITCOIN Act, those reserves were built over a multi-year period.

Unfortunately for traders, a reasonable accumulation of crypto over a multi-year period is unlikely to have a meaningful impact on prices due to those acquisitions alone.

Barring more clarification from President Trump on the proposed cryptocurrency reserves (i.e., unless we learn that the U.S. government will be buying hand over fist), there’s no reason to believe that the U.S. will be anything other than yet another large buyer that’s building up a stake with the expectation that crypto will, at some point in the future, become workable currencies for which its holdings will serve a functional purpose.

Put another way, while it’s undoubtedly a positive announcement for crypto investors, don’t expect a government buying spree to overpower other market forces and flip what’s been a retreat in risk-on assets into a new bull market.