Bitcoin backpedaled on Monday after an early rise

Bitcoin backpedaled on Monday after an early rise following US President Donald Trump's weekend proposal for a national strategic reserve of cryptocurrencies.

Bitcoin prices slipped on Monday, as optimism over US President Donald Trump’s weekend proposal for a national strategic reserve of cryptocurrencies turned to caution with the emergence of more details about this initiative.

By 08:38 GMT (1138), bitcoin rose 2.4 per cent from Friday’s levels to $86,292, but was still trading down 8 per cent from Sunday’s gains.

Trump said in a post on Truth Social on Sunday that his January executive order on digital assets would also create a stockpile of currencies, including bitcoin, ether, XRP, Solana and Cardano.

The names of the cryptocurrencies being included in the strategic reserve 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. The token has been sliding since mid-January due to disappointment Trump had not followed through on pledges to loosen regulation.

Ether was lower by 4.3 per cent from Friday’s level at $2,127.10, but sank nearly 16 per cent from Sunday.

At the same time, XRP tumbled more than 15 per cent from Sunday’s levels to $2.48, but surged 25 per cent from Friday. Solana also weakened, sliding 16 per cent from Sunday to $148.89, and was up 1.6 per cent from Friday.

Cardano sank 19 per cent from Sunday to $0.8940, and fell 3 per cent from Friday.

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 US taxpayer,” said Anthony Pompliano, founder and chief executive officer at Professional Capital Management, and one of the biggest crypto investors, in a letter to his clients on Monday, as he expressed his opposition to the move.

"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 added in the letter.

Moreover, Cameron and Tyler Winklevoss, who run the Gemini crypto exchange, also expressed concern about the reserve in a post on X, formerly known as Twitter. They noted that only bitcoin meets the bar for a store of value as a reserve asset, but weren't 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 per cent 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 US government for its fortunes," said Kathleen Brooks, research director at XTB, as she added that the $100,000 level remained an "obvious target" for bitcoin.

The optimists among traders were also keeping an eye out for any news regarding the composition of the crypto reserve, which could be funded by US taxpayers. Alternatively, the funds could come from cryptocurrencies seized in law enforcement actions, said IG market analyst Tony Sycamore, who pointed out that this "isn't anywhere near as bullish as it simply represents a transfer between accounts rather than new buying entering the market."