Bitcoin Strategic Reserve: Market Impact

President Trump signed an Executive Order (EO) in March, designating BTC as a national Strategic Reserve Asset. However, the EO tasked the Treasury Department with managing existing BTC holdings and developing budget-neutral BTC acquisition strategies.

President Trump's executive order (EO) in March, which designated BTC as a national Strategic Reserve Asset, had largely been priced into the crypto market. However, the EO tasked the Treasury Department with managing existing BTC holdings and developing budget-neutral BTC acquisition strategies.

Notably, Trump's EO did not authorize government agencies to purchase BTC, despite repeated calls from the crypto community. Instead, the EO focused on facilitating the use of digital assets for payments, in line with the administration's broader agenda.

Moreover, Trump's administration faced criticism for its handling of trade disputes and tariffs, which some economists believed could escalate into a trade war. These concerns, coupled with the looming threat of a US recession, weighed heavily on investor confidence and contributed to a pessimistic outlook.

Five Weeks of Institutional Outflows from US BTC-Spot ETF Market

Risk aversion, driven by Trump's tariffs and concerns over a potential US recession, had a significant impact on institutional demand.

In the final quarter of 2019, the US BTC-spot ETF market experienced net outflows, which then carried over into the first quarter of 2020.

For the week ending March 14, the US BTC-spot ETF market reported net outflows of $945.4 million, extending the outflow streak to five weeks.

According to calculations by Glassnode and data from crypto analytics firm Farside investors, the largest weekly ETF outflows included:

• BTC-linked ETFs saw outflows of $1.13 billion.

• Multi-coin crypto ETFs reported inflows of $184.6 million.

As institutional investors continued exiting their BTC positions, weakening demand disrupted the cryptocurrency's supply-demand balance.

Despite the U.S. administration's move to include BTC in its Strategic Reserve and the potential implications for crypto traders, the lack of a directive for government agencies to purchase BTC ultimately disappointed the crypto market.