Crypto Czar David Sacks First Announced Plans on X
US Won’t Use Taxpayer Money to Fund Strategic BTC Reserve
Bitcoin traders who had been banking on a major government-backed buying spree were left disappointed after President Donald Trump signed an executive order establishing a strategic Bitcoin reserve—but with strict limitations.
While the move was initially seen as a positive step toward institutionalizing Bitcoin within US financial policy, the details sent shockwaves through the market, with Bitcoin dropping as much as 5.7% before recovering slightly.
Market Reaction: A Selloff Driven by Disappointment
Despite the crypto industry’s initial enthusiasm, the executive order lacked the expected funding mechanisms for large-scale Bitcoin acquisitions.
Instead of taxpayer funds being used to bolster the reserve, the order stated that the reserve would be stocked only with Bitcoin already in the federal government’s possession—most of which was obtained through asset forfeitures in criminal and civil cases.
At 7:10 a.m. in London, Bitcoin was trading at $88,567, down about 3.2% from the previous day. The broader crypto market also faced declines, with Ether, XRP, Cardano, and Solana all retreating after the announcement.
Crypto Community’s Response
“Previously, investors were jumping into the market in anticipation of the government buying Bitcoin. With this latest development, those positions are being unwound,” said Stefan von Haenisch, director of over-the-counter trading in Asia Pacific at Bitgo Inc.
The skepticism was further compounded by the government’s stance on non-Bitcoin assets. The executive order clarified that additional crypto tokens would only be added to the reserve through asset forfeitures, rather than direct purchases.
Even more concerning to the market, the order explicitly stated that the Treasury could sell off these assets at its discretion—introducing additional uncertainty for traders holding those coins.
Forex Angle: Bitcoin Volatility and USD Strength
The reaction to Trump’s executive order didn’t just impact crypto traders—it also had forex implications.
The US dollar, which often moves inversely to Bitcoin, strengthened slightly against major currencies like the EUR, GBP, and JPY, reflecting a shift in risk sentiment. With Bitcoin failing to rally on government support, risk appetite in broader markets weakened, leading to safe-haven flows into the USD.
For forex traders, Bitcoin’s price movement serves as a barometer of speculative sentiment. A sharp BTC decline could signal broader market risk-off sentiment, pushing investors toward the US dollar, gold, and bonds. Conversely, a Bitcoin rebound might align with renewed dollar weakness and increased risk-taking in forex markets.
Trading Bitcoin Volatility: Broker Strategies
Different forex and crypto brokers handle Bitcoin volatility in varied ways:
High-Leverage Brokers: Some forex brokers, such as Exness and IC Markets, offer BTC/USD trading with leverage up to 1:100, enabling traders to capitalize on volatility with minimal capital.
Fixed vs. Floating Spreads: Brokers like Pepperstone and XM offer floating spreads, which can widen during volatility. Traders need to be cautious about entry and exit points.
CFD Trading vs. Spot Crypto: Platforms such as eToro and Forex.com allow traders to speculate on Bitcoin without owning the asset, reducing exposure to exchange risks.
For active traders, choosing the right broker is crucial when dealing with Bitcoin’s price swings. Some brokers even provide negative balance protection, helping traders manage risk in highly volatile conditions.
Political Strategy or Market Catalyst?
The creation of a strategic Bitcoin reserve was a campaign promise from Trump, who courted crypto-friendly voters with pledges to fire SEC Chair Gary Gensler and reduce regulatory barriers. While the executive order technically fulfills his commitment, many in the crypto space see it as symbolic rather than substantive.
“The significance of this executive order is mainly symbolic, as it marks the first time Bitcoin is formally recognized as a reserve asset of the United States government,” said Andrew O’Neill, managing director of digital assets at S&P Global Ratings. However, traders had been expecting actual capital inflows from the government—expectations that weren’t met.
Market Implications: Trade the Volatility or Buy the Dip?
With the lack of immediate government-backed Bitcoin purchases, the short-term outlook for BTC is mixed. On one hand, the confirmation of Bitcoin’s status as a reserve asset lends legitimacy to its role in global finance. On the other hand, the lack of fresh buying pressure from the US government removes a key bullish catalyst that traders had priced in.
So, is it better to trade the volatility or hold long-term?
For short-term traders, this presents an opportunity to trade price swings. With Bitcoin reacting sharply to policy shifts and investor sentiment, volatility could provide profitable trading setups for those skilled in navigating quick reversals.
For long-term investors, the dip may represent a buying opportunity, particularly given Bitcoin’s growing institutional adoption. If Trump’s order eventually leads to further policy changes that are more supportive of government-backed Bitcoin accumulation, current levels could look cheap in hindsight.
What’s Next for Crypto and Forex Markets?
The timing of the executive order is notable, as a delegation of crypto executives from companies like Coinbase Global Inc. and Robinhood Markets Inc. is set to meet with Trump and White House crypto czar David Sacks in Washington, D.C.
With Bitcoin now officially recognized as part of the US strategic reserve, future regulatory decisions and economic policies will play a crucial role in determining its trajectory.
Meanwhile, forex traders should keep an eye on USD strength and risk sentiment shifts, as crypto volatility could drive movements in major currency pairs.
Final Thoughts
Trump’s executive order was a historic moment for Bitcoin, but it ultimately left the market wanting more. The lack of new government-backed demand led to a price decline, and uncertainty over the treatment of non-Bitcoin assets added additional market jitters.
For traders, the coming weeks will be crucial in determining whether to capitalize on volatility or take a long-term bet on Bitcoin’s inclusion in US policy.