Trump’s federal Bitcoin reserve order leaves the crypto market unenthused

With US stocks unstable, consumer confidence in the economy plunging and whispers of a potential recession growing less muted, the economy under President Donald Trump’s second term has been about as stable as a recovering addict’s first week back on blow. With that turbulence as a backdrop, the cryptocurrency industry hoped Thursday’s executive order establishing a federal Bitcoin reserve would at least spur a surge in the blockchain ecosystem. Instead, Bitcoin’s value has dropped sharply, and one crypto-focused hedge fund founder called Trump’s order “the most underwhelming and disappointing outcome we could have expected for this week.”

After Trump posted in January that he would sign an executive order to establish a crypto stockpile, the market responded enthusiastically and prices rose accordingly. Bitcoin spiked to an all-time high of over $109,000 in January (after surpassing the $100,000 mark for the first time in early December).

On Friday, at its lowest point following Trump’s executive order, Bitcoin fell by around five percent to $85,000. It had recovered a bit at the time of publication but was still only hovering at around $88,000, a nearly 20 percent nosedive from its January high (and down over 2.2 percent on the day).

‘Just a fancy title for Bitcoin holdings that already existed’

Much of the underwhelming reaction stems from the reserve’s use of shares already owned by the government through seizures or civil asset forfeitures. Although the order leaves the door open to possible government Bitcoin purchases in the future, White House crypto czar David Sacks clarified that the executive branch was only “authorized to develop budget-neutral strategies for acquiring additional Bitcoin, provided that those strategies impose no incremental costs on American taxpayers.”

That wasn’t what the crypto bros were hoping for. “This is the most underwhelming and disappointing outcome we could have expected for this week,” Charles Edwards, founder of the crypto-focused hedge fund Capriole Investments, posted on X (via Reuters). “No active buying means this is just a fancy title for Bitcoin holdings that already existed with the Govt. This is a pig in lipstick.”

In addition, the executive order also calls for a “US Digital Asset Stockpile” for other crypto tokens, which Trump has said will include Ether, XRP, Solana and Cardano.

Potential conflicts of interest

Crypto industry executives are holding a summit at the White House on Friday to, among other topics, get a better lay of the land regarding future regulatory enforcement. Among the attendees is Coinbase CEO Brian Armstrong, whose company was one of several that recently had enforcement cases dropped by Trump’s SEC. (Convenient!) Reuters reports that analysts believe the market needs a reason to become bullish again, like a clearer pro-crypto regulatory policy or signs that the US Federal Reserve plans to cut interest rates.

Trump successfully courted the industry in his 2024 campaign. In addition to pledging to create a federal crypto reserve, he promised to make America “the crypto capital of the planet” and fire SEC Chair Gary Gensler on day one. (In November, he announced he would resign the moment Trump took office on January 20.)

The 47th US President also has a stake in crypto, which has set off alarms (if not blaring sirens) of potential conflicts of interest. First, he and First Lady Melania Trump have memecoins, currently down 80 and 90 percent, respectively, from their all-time highs right before his inauguration. Trump also has a stake in the crypto platform World Liberty Financial, which reportedly bought over $20 million worth of cryptocurrencies — including over $10 million in Ether, $9.9 million in Bitcoin derivative WBTC and $1.68 million in MOVE — ahead of Friday’s White House summit.