Bitcoin prices fell over 5% after US President Donald Trump signed an executive order to establish a strategic bitcoin reserve

Bitcoin prices fell over 5% after US President Donald Trump signed an executive order to establish a strategic bitcoin reserve. The order was signed on Thursday

U.S. President Donald Trump's surprising announcement of a strategic bitcoin reserve has sparked a over 5% fall in bitcoin prices. The news comes as Trump prepares to meet with top cryptocurrency executives at the White House on Friday.

The executive order, signed by Trump on Thursday, aims to create a new national cryptocurrency strategy. The order also directs the Treasury and Commerce departments to work together in acquiring more bitcoin without increasing costs for taxpayers.

The White House crypto czar, billionaire David Sacks, took to social media platform X, formerly known as Twitter, to announce the strategic bitcoin reserve. The reserve will be funded by bitcoin already owned by the U.S. government, which comes from criminal or civil asset forfeiture cases. However, the executive order does not specify how the reserve would function or its potential benefits for taxpayers.

Bitcoin prices dropped 5.2% to $84,838.57 following the announcement. Market watchers noted that the sudden move creates uncertainty, which could lead to volatility in crypto prices.

Despite the setback for crypto bulls, some supporters believe that the move could help stabilise the market and provide long-term benefits.

Trump’s crypto summit at the White House on Friday is expected to be a platform for him to formally announce the reserve, which will include five digital assets. Earlier this week, Trump named the five cryptocurrencies that he expects to be part of the reserve—bitcoin, ether, XRP, solana, and cardano.

Sacks said that bitcoin stored in the reserve would not be sold and would instead be kept as a long-term store of value. He compared the strategic bitcoin reserve to Fort Knox, the U.S. gold storage facility, and referred to bitcoin as "digital gold."

However, the lack of clarity on how the reserve would operate and how it would be managed has raised concerns among investors and analysts.

Trump’s support for the cryptocurrency industry comes as crypto firms spent millions backing him and other Republicans in the upcoming elections.

Some conservatives and crypto industry insiders have questioned whether the move benefits only a wealthy group rather than the broader economy.

Trump’s administration has repeatedly stated that its priority is to benefit taxpayers. However, critics argue that the administration’s plan to acquire more bitcoin without increasing costs for taxpayers is not feasible.

According to House Democrats, the Biden administration has already sold 200,000 bitcoin seized from Silk Road at a loss of $17 billion to taxpayers. These funds were allocated to help those affected by Hurricane Harvey in 2017.

Sacks, a known supporter of the cryptocurrency industry, estimated that the U.S. government currently holds about 200,000 bitcoin. He claimed that premature sales of the cryptocurrency have already cost taxpayers $17 billion, though it is unclear how he arrived at these figures.

The move has also sparked concerns about conflicts of interest. Trump’s family has launched its own cryptocurrency meme coins, and the president is reported to have a stake in World Liberty Financial, a crypto platform.

While Trump’s aides have said that he no longer manages his business interests, outside ethics lawyers are reviewing his financial dealings, as per the report by The New York Times.