By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) -Bitcoin backpedaled on Monday after an early rise following U.S. President Donald Trump’s weekend proposal for a national strategic reserve of cryptocurrencies.
Optimism on digital currency after Trump’s Sunday post on Truth Social turned to caution as market participants awaited more details about this crypto initiative.
The world’s largest cryptocurrency, bitcoin, was up 1% from Friday’s levels at $87,235, but down 7.6% from its high during Sunday’s rally of almost 10%.
Trump said his January executive order on digital assets would create a stockpile of currencies, including bitcoin, ether, XRP, Solana and Cardano. The names had not previously been announced.
Bitcoin and ether will be at the heart of this reserve, he said in a post on Sunday that sent bitcoin up by a fifth from the November lows it plumbed on Friday. The token has been sliding since mid-January due to disappointment Trump had not followed through on pledges to loosen regulation.
Ether was up 2.2% from Friday’s closing level at $2,254.57, but off 1.4% from Sunday.
XRP was down more than 15% from Sunday’s levels to $2.48, but surged 25% from Friday. Solana also tumbled, down 16% from Sunday to $148.89, but was up 1.6% from Friday.
Cardano slipped 18% from Sunday to $0.8940, but surged 40% from Friday.
Anthony Pompliano, founder and chief executive officer at Professional Capital Management, and one of the biggest crypto investors, said in a letter to his clients on Monday he was not in favor of a strategic crypto reserve.
“Even though Solana is our second largest crypto position, and various public equities I hold are heavily correlated to altcoins, I still think this decision on a wide-ranging crypto strategic reserve is an unforced error that will be regretted in the future,” Pompliano said in a letter to investors.
He warned that the emerging policy appeared to be “a random smattering of speculative tools that will enrich the insiders and creators of these coins at the expense of the U.S. taxpayer.”
Cameron and Tyler Winklevoss, who run the Gemini crypto exchange, said on X, formerly known as Twitter, that only bitcoin meets the bar for a store of value as a reserve asset, but were not sure about the other cryptocurrencies.
Still, Trump’s promise of a strategic reserve has generated excitement for the crypto industry, which has languished in recent weeks.
Bitcoin fell more than 17% in February, its biggest monthly percentage fall since June 2022. It lost more than a third of its price since topping $105,000 in early January.
Its rally since Trump’s November election was spurred by optimism that he would champion a strategic bitcoin fund and end former President Joe Biden’s crackdown.
“Ironically, a currency that was designed to be isolated from government interference and decentralized, is now reliant on the U.S. government for its fortunes,” said Kathleen Brooks, research director at XTB, reiterating that the $100,000 level was an “obvious target” for bitcoin.
Beyond a flurry of appointments of crypto-friendly officials when Trump took office, there has been little concrete news so far around that policy for investors.
IG market analyst Tony Sycamore wrote that the Trump announcement has raised concerns.
The funding for cryptocurrency purchases in the reserve could either come from U.S. taxpayers or the cryptocurrencies in the asset will be those seized in law enforcement actions, he said.
“The latter isn’t anywhere near as bullish as it simply represents a transfer between accounts rather than new buying entering the market.”
(Reporting by Gertrude Chavez-Dreyfuss in New York, Vidya Ranganathan in Singapore, and Kevin Buckland in Tokyo; Additional reporting by Yadarisa Shabong and Lisa Mattackal in Bengaluru; Editing by Amanda Cooper, Bernadette Baum and David Gregorio)
About the Author
