Donald Trump, the former casino magnate, appears to be eyeing a return to the gambling arena, but this time, the stakes are digital. He’s venturing into the world of cryptocurrency.
Yesterday, Trump signed an executive order, creating a “Strategic Bitcoin Reserve” and a “Digital Asset Stockpile” comprised of various cryptocurrencies. Although details are limited about the executive order, as of now, the bitcoin stockpile, is “a virtual Fort Knox for digital gold,” according to comments made by Trump at a White House crypto summit. The former president also brought up the common crypto phrase, “Never sell your bitcoin,”
Governments often stockpile essential commodities like oil, pork, or cabbage to manage market disruptions. However, a crypto reserve functions differently. The stated aim of this order is to boost “economic growth and technological leadership,” as a fact sheet explained. But unlike essential resources, cryptocurrency is a volatile, speculative asset with limited real-world application.
The “Strategic Bitcoin Reserve,” as it turns out, primarily involves taking existing crypto assets seized by the government and officially accounting for them. The U.S. has seized substantial crypto holdings over time, currently valued at an estimated $17 billion in bitcoin alone. Trump’s interest in this idea may stem from potential personal benefits. He recently launched his own memecoin, $TRUMP, and has strong connections to the crypto industry.
On Truth Social, Trump announced his intentions: “I will make sure the U.S. is the Crypto Capital of the World,” he wrote. “We are MAKING AMERICA GREAT AGAIN!” Several of his administration’s key figures also have crypto ties. Trump’s crypto and AI czar, David Sacks, and Commerce Secretary Howard Lutnick, are two of the most prominent figures. (Sacks, who has said he sold his crypto holdings prior to the start of the administration, and Lutnick, who agreed to divest his business interests by mid-May).
A government stockpile could potentially drive up crypto prices. The industry operates on the principle of “Number go up.” A crypto reserve effectively positions the U.S. government as a new major buyer. The executive order also considers acquiring additional bitcoin, a move that could further increase its value.
Interestingly, Trump named specific coins to be included in the stockpile: bitcoin, ether, Solana, Cardano, and XRP. The immediate impact of this announcement was a spike in the value of those coins. Any government involvement in crypto raises concerns about potential misuse since crypto transactions can be anonymous and could be used to facilitate corruption and bribery.
With the crypto reserve now established, Trump may need to keep crypto prices climbing for his policy to look successful. Driving the prices higher would require a steady stream of positive news. However, initial reactions to his executive order were not positive among crypto traders. Bitcoin’s price dropped immediately after the order.
As the adage advises, “Buy the rumor; sell the news.” Eventually, the government could be left holding a large crypto reserve, struggling to increase its value without buyers to sell to. If this continues, Trump may benefit, but the consequences might fall on the American people.
