$BTC Why Did Bitcoin Dump After Trump Signed BTC as a National Reserve?

When news breaks that a major government—especially one led by a figure like Donald Trump—has signed Bitcoin (BTC) into its national reserve, most people would expect the price of BTC to skyrocket. Instead, we saw a sharp sell-off in this hypothetical situation. Why might this happen? Here are a few possible reasons:

1. Buy the Rumor, Sell the News

Cryptocurrency markets are known for the classic “buy the rumor, sell the news” behavior. Traders and investors often accumulate BTC in anticipation of a big announcement. Once the news goes public, many of these traders take profits immediately, causing a sudden dip in price.

2. Regulatory Uncertainty

Even if a leader signs off on holding Bitcoin as a national reserve, it doesn’t eliminate regulatory concerns. Investors may worry about how other countries or international organizations will react. Could there be new regulations, taxes, or even sanctions in response to such a move? This uncertainty can lead to short-term panic selling.

3. Profit-Taking by Whales

Large holders of Bitcoin—often called “whales”—may use major announcements as liquidity events. When the market volume spikes on bullish news, whales can offload large portions of their holdings without significantly affecting the market—at least initially. But once enough whales sell, the price can start to tumble.

4. Market Overreaction & FUD

Crypto markets are highly emotional and react quickly to both good and bad news. In some cases, overblown expectations lead to disappointment. If the market perceives that the government’s announcement isn’t as bullish as expected—or is tied to stricter controls—fear, uncertainty, and doubt (FUD) can spread, pushing prices downward.