Industry underwhelmed

U.S. President Donald Trump yesterday signed an order creating a pair of strategic crypto reserves containing coins already owned by the government. Digital markets initially fell on the news, which is still being digested. But Bitcoin was up this morning relative to last night, as it battled back to $89K.

A Strategic Bitcoin Reserve, to be set up by an office within the Treasury Department, will be capitalized with BTC that's been confiscated. The reserve will only include BTC already in federal possession, and there's no indication yet of how much, if any, additional BTC would be purchased, nor has any timeline for any fresh buying been given.

The order also created a U.S. Digital Asset Stockpile, under Treasury, to manage other coins and assets. Additionally, at least cracking opening the door to new purchases, the Treasury and Commerce secretaries are authorized to create new "budget-neutral" strategies to acquire more BTC for the reserve.

"The significance of this executive order is mainly symbolic, as it marks the first time Bitcoin is formally recognized as a reserve asset of the United States government," said Andrew O'Neill, digital assets managing director at S&P Global Ratings (Reuters).

"This is a pig in lipstick," one crypto fund manager groused on X.

Later today, the White House will hold its first-ever Crypto Summit. 

“There may still be several surprises that come out," said Gerald Gallagher, general counsel for Sei Labs.

Uninspired traders offloaded Bitcoin after the Trump administration revealed plans for a strategic crypto cache.

The announcement was made on X by David Sacks, Trump's crypto czar. His post came just after 7 p.m. (EST). "Just a few minutes ago, President Trump signed an Executive Order to establish a Strategic Bitcoin Reserve," Sacks wrote. "The 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."

It is estimated that the U.S. government owns about 200,000 BTC worth (as of today) roughly $17.5B.

Many market denizens were banking on the government blazing into the fray full bore, proactively buying new coins.

"This is the most disappointing outcome we could have expected this week," Capriole Investments' founder, Charles Edwards wrote on X, per Reuters.

Prior to Sacks' splashy social media post, the largest crypto was firmly $90,000. Within a few minutes, BTC had tumbled 5% to $85,000 before eventually bobbing back up toward $89,000 as of early this morning.

A "sell-the-news" reaction to the U.S. crypto reserve announcement last night has sort of given way to renewed optimism with the much-anticipated industry summit set to take place at the White House later today.

In Asia and Europe trading hours, some seemingly cast-aside altcoins showed signs of resilience.

Solana (SOL), for example, rallied from a near-term low of $135 to $146 as of earlier this morning.

“I still don’t understand how people fail to distinguish between bullish and non-bullish news,” said BitQuant, an analyst, speaking to Cointelegraph.

“I can't recall a time when Bitcoin was more bullish,” he added.

Another potential volatility catalyst comes into focus today: interest rates. There's employment data due for release and Fed Chair Jerome Powell is set to deliver a speech.

As Cointelegraph noted, one week after the Fed’s most-favored inflation gauge showed inflation crawling in place, investors slowly but surely have been increasing their rate cut expectations looking out at the rest of this year.

CME Group’s FedWatch Tool assigns 11% odds to the prospect of a cut at the Fed’s March meeting. But the odds are much higher (almost 50%) for the Fed's May meeting.