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U.S. President Donald Trump announced on Sunday that five cryptocurrencies will be included in the new U.S. cryptocurrency strategic reserve, reigniting investment enthusiasm in the crypto industry. Prior to this, the crypto market had experienced a brutal washout, and now it seems to be experiencing a wave of recovery.
📍 Trump posted on his own Truth Social platform that his January executive order on digital assets will establish a currency reserve that includes Bitcoin, Ethereum, Ripple, Solana, and Cardano. These lists were not previously disclosed.
In a subsequent post, he also stated: "Clearly, Bitcoin and Ethereum will be at the core of this currency reserve."
In January of this year, Trump signed an executive order to establish a working group specifically studying digital assets. The group's task is to assess the feasibility of creating a national digital asset reserve and to develop a clear regulatory framework for the cryptocurrency industry. At the time of signing the executive order, Trump did not specify any particular digital assets.
After the related news broke, the cryptocurrencies named by Trump all rose together. On Sunday afternoon, as the world's largest cryptocurrency, Bitcoin's price surged by $10,000, reaching $95,000. The second-largest cryptocurrency, Ethereum, rose by about 13% to above $2,500. Ripple surged by 33%, Solana jumped by 22%, and Cardano's increase exceeded 60%.
According to cryptocurrency data and analytics firm CoinGecko, the total market capitalization of cryptocurrencies rose by about 10%, exceeding $300 billion, within hours after Trump announced the news.
🔻What do analysts think?
"This move marks a shift towards active participation by the U.S. government in the crypto economy," said Federico Brokate, head of U.S. operations for digital asset investment management firm 21Shares. "It has the potential to accelerate institutional adoption, provide greater regulatory transparency, and strengthen America's leadership in digital asset innovation."
James Butterfill, research director at asset management firm CoinShares, expressed surprise at the inclusion of digital assets other than Bitcoin in the reserves.
"Unlike Bitcoin... these assets are more like technology investments," Butterfill stated. "This statement indicates that (Trump) has taken a more patriotic stance towards the broader crypto technology field, with little consideration for the fundamental characteristics of these assets."
Unlike the Biden administration's crackdown on digital assets, Trump expressed support during his campaign for establishing a U.S. strategic Bitcoin reserve and vowed to make America the 'crypto capital'.
Trump was once a cryptocurrency skeptic, but as the industry heavily supported his campaign, he changed his stance.
Under Trump's leadership, the U.S. Securities and Exchange Commission (SEC) withdrew investigations into several cryptocurrency companies and dropped the lawsuit against the largest U.S. cryptocurrency exchange, Coinbase. The White House will host its first cryptocurrency summit on March 7, where Trump will deliver a speech.
In recent weeks, cryptocurrency prices have fallen sharply, reversing the previous upward trend, with some of the largest digital currencies nearly erasing all the gains triggered by Trump's election victory.
Analysts say the cryptocurrency market needs a reason to rise, such as signs that the Federal Reserve plans to cut interest rates, or that the Trump administration introduces a clear regulatory framework supporting cryptocurrencies.
Standard Chartered analyst Geoff Kendrick expects Bitcoin's price to reach $500,000 before Trump leaves office.
U.S. regulatory documents show that while hedge funds remain the main buyers of cryptocurrencies, banks and sovereign wealth funds are also purchasing. Quarterly documents indicate that asset management firms increased their allocations to U.S. ETFs linked to Bitcoin spot prices in the fourth quarter of 2024.
