Markets React Negatively as Trump’s Executive Order on Bitcoin Reserves Triggers Decline

Key Takeaways:

• Trump's Bitcoin reserve will only use seized BTC, not taxpayer funds.
• BTC's price dropped 7% after the announcement, falling from $92,000 to $85,000.
• Investors were disappointed by the lack of government BTC purchases.

On March 6, President Donald Trump signed an executive order to establish a strategic Bitcoin reserve, marking a major shift in U.S. digital asset policy. 

While many expected this move to boost Bitcoin's value, the opposite happened. BTC price dropped over 7%. Investors were let down by the government's strategy regarding the Bitcoin reserve.

U.S. Government Will Not Actively Purchase Bitcoin

White House Crypto and AI Czar David Sacks shared details in a post on X. He explained that the proposed Bitcoin reserve would use only BTC seized from criminal and civil forfeiture cases. Sacks emphasized that taxpayers would not pay for the reserve. This ensures the reserve's creation remains financially neutral for the public.

Just a few minutes ago, President Trump signed an Executive Order to establish a Strategic Bitcoin Reserve.

The Reserve will be capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings. This means it…

— David Sacks (@davidsacks47) March 7, 2025

He estimated that the U.S. government currently holds approximately 200,000 BTC. However, he acknowledged that no comprehensive audit of federal digital assets has ever been carried out.

The executive order now mandates a full accounting of all government-owned Bitcoin holdings.

Sacks also confirmed that the government will not sell any Bitcoin deposited into the reserve, describing it as a long-term store of value. He likened it to a digital ‘Fort Knox', reinforcing Bitcoin’s reputation as “digital gold.” 

He highlighted that previous premature sales of Bitcoin had cost U.S. taxpayers over $17 billion in lost value, and the new strategy aims to maximize the worth of government-held BTC over time.

Over the past decade, the federal government sold approximately 195,000 bitcoin for proceeds of $366 million. If the government had held the bitcoin, it would be worth over $17 billion today. That’s how much it has cost American taxpayers not to have a long-term strategy.

— David Sacks (@davidsacks47) March 6, 2025

Following the announcement, the BTC price took a sharp hit. Before details of the Bitcoin reserve plan were revealed, Bitcoin was trading at $92,000. However, it quickly tumbled to $84,979 before recovering slightly to around $89,000. 

The decline was shocking given that BTC price had recently reached an all-time high of $109,000 following Donald Trump’s inauguration as U.S. president, fueling optimism about a potential government-backed Bitcoin strategy.

The sudden drop was largely attributed to Sacks’s clarification that the U.S. government would not actively purchase Bitcoin. 

Many Bitcoin supporters expected the U.S. government to follow the lead of pro-Bitcoin entities. These include Michael Saylor’s Strategy, Bitcoin mining firms, and El Salvador, all of which have been steadily accumulating BTC.

“This all stops in April.” “This all stops in June.” “This all stops in December.”

No, it’s not stopping.

If it didn’t stop when the world ostracized us and most “bitcoiners” abandoned us, it won’t stop now, and it won’t stop in the future.

Proof of work > proof of whining https://t.co/9pC0PoY3YQ

— Nayib Bukele (@nayibbukele) March 4, 2025

Spencer Hakimian, founder of New York-based Tolou Capital Management, expressed his disappointment, stating that the Bitcoin reserve plan was underwhelming. 

Another crypto supporter pointed out that President Trump’s pro-crypto campaign had suggested the government would actively buy Bitcoin over time. 

The new plan, which only secures existing holdings rather than acquiring more BTC, was seen as a deviation from what some voters had expected.

The promise was to BUY a certain number of BTC regularly over a period of time.

How is this the same thing? All this is, is saying the government won’t sell seized BTC. That’s NOT what we were sold on.

— bb (@SultanofStacks) March 7, 2025

The disappointment in BTC price movements and investor sentiment indicates how expectations and reality sometimes clash in the crypto market. Whether the Bitcoin reserve strategy will be a stabilizing force or a missed opportunity remains to be seen.

Treasury & Commerce to Plan Cost-Free Bitcoin Acquisition

David Sacks' X post also revealed that the Treasury and Commerce are authorized to develop budget-neutral Bitcoin acquisition strategies without burdening taxpayers.

The announcement has sparked debate as Sacks downplayed Bitcoin purchases, yet now the Treasury is tasked with acquiring more through budget-neutral strategies, fueling speculation.

Michael Saylor responded to Sacks, stating he has several ideas on how the government could acquire Bitcoin without spending taxpayer money. His comment has only added to the growing curiosity about what these strategies might entail.

I have a few budget-neutral strategies for acquiring additional bitcoin…

— Michael Saylor⚡️ (@saylor) March 7, 2025

Additionally, Sacks outlined another key element of the Executive Order: the creation of a U.S. Digital Asset Stockpile, which will consist of digital assets other than Bitcoin. 

This initiative builds on President Trump’s recent announcement that Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Cardano (ADA), and Ripple (XRP) would be included in the nation’s broader crypto reserve. 

However, like the Bitcoin reserve, the government will not actively purchase these assets; only those obtained through legal forfeitures will be added. 

Most of the invite lists circling X are fake but this looks correct (though not yet complete). Note that the Digital Asset Summit is not a conference; it’s a roundtable. We appreciate all of the interest but need to keep it small to have a meaningful conversation. https://t.co/r60gtdKgWN

— David Sacks (@davidsacks47) March 6, 2025

While the specifics of the Bitcoin acquisition remain unclear, the upcoming White House Crypto Summit, scheduled for today, is expected to provide more details on implementing these strategies.