Bitcoin retreats after early gains on Trump’s crypto reserve proposal
Bitcoin initially surged on Monday (March 4, 2025) following US President Donald Trump’s proposal for a national strategic reserve of cryptocurrencies, but optimism faded as traders awaited more details on the plan.
After rising 2.4% from Friday to $86,292, bitcoin later dropped 8% from Sunday’s levels. Ether followed a similar trend, falling 4.3% from Friday and 16% from Sunday. Other cryptocurrencies also saw sharp declines – XRP tumbled 15%, Solana slid 16%, and Cardano dropped 19% from Sunday’s peak.
Trump’s January executive order on digital assets set the stage for the reserve, but his Sunday announcement on Truth Social was the first time he named specific cryptocurrencies: Bitcoin, Ether, XRP, Solana, and Cardano. The lack of further details left the market cautious.
Market reactions and concerns
Anthony Pompliano, CEO of Professional Capital Management, voiced scepticism about the proposal in a letter to investors. Despite holding a large Solana position, he called the reserve “a random smattering of speculative tools” that could benefit insiders at the expense of US taxpayers.
Crypto exchange founders Cameron and Tyler Winklevoss also raised concerns, arguing that bitcoin is the only cryptocurrency that meets the criteria for a reserve asset.
Bitcoin’s recent volatility
Bitcoin has struggled in recent weeks, falling more than 17% in February, its worst monthly decline since June 2022. The cryptocurrency has lost over a third of its value since hitting $105,000 in early January, driven in part by disappointment over Trump’s lack of concrete action on crypto regulation.
While Trump’s election in November fueled speculation that he would champion a strategic bitcoin stockpile, there has been little movement beyond appointing crypto-friendly officials.
IG analyst Tony Sycamore noted that how the reserve is funded remains unclear. If the government uses taxpayer money for crypto purchases, it could spark opposition. Alternatively, if the reserve is funded through seized cryptocurrencies from law enforcement actions, it may not generate new market demand.
Trump’s five chosen cryptocurrencies
Trump’s announcement named five cryptocurrencies for inclusion in the proposed strategic crypto reserve.
1. XRP
XRP, created by Ripple, is the third-largest cryptocurrency, with $140 billion worth of tokens in circulation. Ripple has positioned XRP as a fast, low-cost method for global transactions and has been active in lobbying for crypto-friendly regulations.
Ripple’s legal battle with the SEC over whether XRP was sold as an unregistered security ended with a partial victory for the company. Its CEO Brad Garlinghouse, who has met with Trump, welcomed the reserve proposal.
2. Solana (SOL)
Solana, which runs on its own blockchain, is often used for meme coins and NFTs. Trump’s own cryptocurrency, launched in January, is based on Solana.
The token’s price soared in 2021 but plummeted in 2022 due to its association with FTX founder Sam Bankman-Fried, who was a major supporter. Solana is managed by the Solana Foundation, a Swiss-based nonprofit.
3. Cardano (ADA)
Cardano was founded in 2015 by Charles Hoskinson, a co-founder of Ethereum. There are $31.4 billion worth of ADA tokens in circulation, making it the eighth-largest cryptocurrency.
Cardano’s price saw the biggest spike following Trump’s announcement, briefly surging over 70% from Friday’s levels before pulling back.
4. Bitcoin
The largest cryptocurrency, bitcoin has a market value of $1.7 trillion, accounting for more than half of the $3 trillion crypto market.
Bitcoin’s price jumped in late 2023 and early 2024, driven by two major factors:
- The US SEC’s approval of bitcoin exchange-traded funds (ETFs) in January
- Trump’s election, which sparked hopes of pro-crypto policies
However, the recent decline highlights the ongoing volatility in the market.
5. Ether (ETH)
Ether, the cryptocurrency of the Ethereum blockchain, is the second-largest digital asset. Unlike bitcoin, Ethereum aims to support decentralised finance (DeFi) applications that operate without intermediaries.
Trump’s crypto venture, World Liberty Financial, has issued Ethereum-based digital tokens, selling over $500 million worth so far.
What is the crypto strategic reserve?
The January 23 executive order outlined the creation of a national stockpile of digital assets under a new federal regulatory framework. This initiative is overseen by the Presidential Working Group on Digital Asset Markets, which includes:
- The White House AI & Crypto Czar
- The US Treasury Secretary
- The SEC Chairman
Trump’s Sunday post was the first indication that this reserve would extend beyond bitcoin to include ether, XRP, Solana, and Cardano.
However, there are still many unanswered questions, including:
- How much of each cryptocurrency will be held?
- How will the government acquire these assets?
- Will taxpayer funds be used, or will the reserve rely on seized digital assets?
Further details may emerge at Friday’s White House Crypto Summit, where Trump is expected to meet with industry leaders.
Purpose and criticism of a strategic crypto reserve
Supporters argue that a crypto reserve could function similarly to the Strategic Petroleum Reserve, helping the US hedge against financial risks and diversify government holdings.
Critics, however, point out key risks:
- Cryptocurrencies are highly volatile and may not be reliable as reserve assets.
- The inclusion of altcoins like Solana and Cardano could disproportionately benefit private industry players.
- If taxpayer funds are used, the program could face significant opposition.
Kathleen Brooks, research director at XTB, noted the irony in bitcoin’s dependence on US government policies, stating that the cryptocurrency—designed to be decentralised and independent of government control—is now tied to regulatory decisions.
For now, investors are waiting for further clarity. Until more details are revealed, bitcoin’s rally may struggle to hold, and the broader crypto market could remain volatile.
(Photo by Unsplash)
See also: How Lazarus Group became a global cybercrime threat from Sony to Bybit
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