Trump's 'Strategic Bitcoin Reserve' Fails to Pump the Bags as Reality Sets In

Crypto bros hoping that Donald Trump would pump their bags by buying BTC tokens were instead left holding the bag by the U.S. president's 'strategic reserve' plan.

Crypto bros hoping that Donald Trump would pump their bags by buying BTC tokens were instead left holding the bag by the U.S. president’s ‘strategic reserve’ plan.

On March 6, Trump’s A.I. & Crypto Czar David Sacks tweeted that President Trump had signed an executive order “to establish a Strategic Bitcoin Reserve.”

This reserve “will be capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings. This means it will not cost taxpayers a dime,” Sacks added.

The administration is planning to create a Strategic Bitcoin Reserve, capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings. This means it will not cost taxpayers a dime. The administration is also establishing a United States Digital Asset Stockpile, consisting of all the tokens other than Bitcoin currently owned by the government, which will be used to build the Bitcoin reserve. Together, these initiatives will create a robust and lasting digital asset strategy for the United States.

— David Sacks (@davidsacks) March 6, 2024

Sacks revealed that the government currently owns “around 200,000” BTC tokens, but a full accounting of the government’s total digital asset holdings would now be conducted.

None of the BTC earmarked for the reserve would be sold, as Sacks claimed the government’s previous sales (of around 195,000 BTC) had resulted in “$17 billion in lost value.”

The initial reaction to Sacks’ announcement sent the BTC token’s fiat price above $90,000. However, the price soon plummetered below $86,000 as reality set in that there wouldn’t be any additional BTC purchases.

The token briefly bounced back over $90,000 on March 7, but this too proved short-lived and the token was struggling to stay above $80,000 by the afternoon of March 9.

The executive order also establishes a companion “United States Digital Asset Stockpile” consisting of all the tokens other than BTC currently owned by the government.

While this stockpile likely includes the tokens promoted in Trump’s March 2 Truth Social post that referenced “XRP, SOL, and ADA,” Sacks later told Bloomberg that Trump’s post “just mentioned the top five cryptocurrencies by market cap” and warned about people “reading into this a little bit too much.”

The executive order directs the secretaries of the Treasury and Commerce departments to “develop strategies for acquiring additional Government BTC provided that such strategies are budget neutral and do not impose incremental costs on United States taxpayers.”

There was no equivalent direction regarding the ‘digital asset stockpile,’ to which only tokens subject to criminal or civil asset forfeiture will be added absent “further executive or legislative action.”

BTC bagholders had invested much of their hopes in Trump announcing plans to use taxpayer funds to buy a million or more tokens, so the ensuing price slump was understandable. BTC maximalists are now seizing on the idea of what ‘budget neutral’ actions might result in the government acquiring additional BTC tokens.

On March 7, Sacks said ‘budget neutral’ meant “it won’t cost the taxpayer anything. It won’t increase the deficit, it won’t increase the debt.”

Asked whether budget savings from Elon Musk’s controversial Department of Government Efficiency (DOGE) might represent taxpayer savings that could be applied to buying BTC, Sacks said he didn’t know the answer to that question.

Sacks added that Treasury Secretary Bessent and his team “will be able to exercise portfolio management” over the digital assets under the government’s control.

As far as the non-BTC tokens are concerned, “that could include staking, it could include rebalancing, it could include sales. These are all options that they can pursue.”

In a separate interview, Sacks suggested one way that the government might acquire more BTC is by selling its ETH (the Ethereum network’s native token). The government is believed to hold nearly 46,000 ETH worth a total of $91 million, although that’s a relative drop in the bucket that would be unlikely to move BTC’s price very far.

On March 7, Bessent told CNBC that the first element of the reserve strategy was to “stop the selling” of any BTC under the government’s control. After that, “we’ll see what the way forward is for more acquisitions for the reserves.”

Asked about how taxpayers would view any plans to buy additional BTC, Bessent simply repeated that it was a matter for future discussion.

Rep. French Hill (R-AR), the chairman of the House of Representatives Financial Services Committee, tweeted his approval of Trump’s executive order while encouraging Trump’s team “to collaborate with Congress, particularly in regard to the structure and funding” of the