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Donald Trump orders creation of a US crypto reserve

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Donald Trump orders creation of a US crypto reserve
  • The US president ordered the creation of a national crypto reserve.
  • The decision to include altcoins surprised the community.
  • Analysts flagged signs of insider trading around Donald Trump’s announcement.

US President Donald Trump directed the digital-asset markets task force to “set in motion” the creation of a strategic crypto reserve that will include XRP, SOL and ADA.

Data: Truth Social.

“And, obviously, BTC and ETH, like other valuable cryptocurrencies, will be the heart of the reserve. I also love Bitcoin and Ethereum!” the head of state added.

Trump delivers on a promise, but questions linger

Building a national stockpile of digital gold was among his campaign pledges. Many in the community expected that, upon returning to the White House on January 20, Trump would move early to create a strategic bitcoin reserve.

The US president established a task force on digital-asset markets led by David Sacks, the “crypto czar”. He called a priority for the body an assessment of forming a national fund in virtual currencies.

Vague wording from officials and the absence of an explicit mention of bitcoin disappointed some. Supporters of the first cryptocurrency noted that before the election Trump spoke specifically about a bitcoin reserve.

Following the president’s remarks, the assets he cited in the context of a national crypto fund jumped sharply. Over the past 24 hours, ADA rose by more than 50%.

Data: CoinGecko.

Yet total market capitalisation fell by 8% in 24 hours to $2.76 trillion. Bitcoin’s dominance over the period slid from 54.91% to 48.84%.

Trump’s choice to form a multi-asset reserve surprised many. Peter Schiff, a well-known critic of digital gold, called the inclusion of altcoins illogical.

He said he disagreed with the initiative overall, but could at least understand the case for bitcoin.

“But what’s the rationale for an XRP reserve? Why the hell would we need that?” asked the founder of Euro Pacific Asset Management.

Jeff Park, head of alpha strategies at Bitwise, called it a “huge political miscalculation” by Trump to underestimate bitcoin’s uniqueness. He warned that including altcoins in the fund risks prompting suspicions of insider dealing.

“This is politically negative, even among crypto enthusiasts,” Park stressed.

Casa CEO Nick Neuman argued that digital gold is the only cryptoasset that makes “any logical sense whatsoever” as part of reserves.

“Digital assets with infinite supply, especially those with zero utility, do not fit the bill,” he said.

In a similar vein, Riot Platforms vice-president of research Pierre Rochard said altcoins “will inevitably be demonetised and depreciate relative to bitcoin”, from which the reserve would “naturally” be composed.

“Guys, this is basic economics,” Rochard emphasised.

Mint Ventures partner Alex Xu drew attention to the sizeable sponsorship that the companies behind XRP, SOL and ADA provided to Trump before and after the election. He suggested this could explain their inclusion in the national crypto fund.

“But this absurd approach will only weaken the seriousness of a strategic bitcoin reserve and further reduce the chances of the relevant bill being adopted at the federal level,” Xu argued.

Signs of insider trading flagged after Trump’s move

Eric Trump called it “genius” to announce the creation of a national crypto fund on a Sunday, when “traditional markets are closed and Wall Street sleeps”.

“For the first time, retail investors win. Traditional finance better catch up, or it will quickly become extinct. The world no longer runs Monday–Friday, 9 to 5,” he wrote.

Meanwhile, experts pointed to signs of possible insider activity around the White House initiative. The Moon Show founder Carl Moon noted roughly $200m of long positions in bitcoin and Ethereum opened just before the president’s statement. To him, it looked suspicious.

At The Kobeissi Letter they noted that, with 50x leverage, a 2% decline would have triggered liquidations. The announcement of the reserve followed.

“Did anyone know?” the outlet asked.

A trader known as Kate The Alt pointed to an anomalous one-off inflow of XRP to Binance before Trump’s message.

“Definition of insider trading,” she concluded.

Earlier, Cobo and F2Pool co-founder Shen Yu linked the continuation of the bull market to clarity on the prospects for a US bitcoin reserve.

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