Bitcoin unexpectedly plunged to around $85,500 as U.S. President Trump signed an executive order to establish a U.S. Bitcoin strategic reserve, but the White House cryptocurrency chief revealed that aside from assets obtained through asset forfeiture procedures, the U.S. government will not purchase additional assets for the reserve. The White House’s AI and cryptocurrency czar David Sacks stated in a post that Trump signed an executive order to establish a strategic Bitcoin reserve, noting that the reserve will be funded by Bitcoin seized by the federal government in criminal or civil asset forfeiture proceedings.
Due to the lack of strength among Bitcoin bulls to push the price further into the previous trading range, it briefly rose to a local peak near $93,000 but ultimately failed.
Reasons for the sharp decline:
1. Is the 'buy the expectation, sell the fact' curse reappearing?
The most common operation in the cryptocurrency world is: once the wind starts blowing, the coin price skyrockets; once the news lands, it’s immediately sold off.
This dramatic 'Bitcoin reserve' performance by the U.S. government may have been wildly speculated upon during the rumor stage, and once the news is officially released, the 'good news landing' could instead turn into 'good news fully priced in.'
2. Tightening funds & large holders cashing out?
Another possibility: large holders had already positioned themselves and went on a crazy sell-off as soon as the news broke. After all, for them, the best scenario is to sell their chips at high prices in a favorable atmosphere while retail investors are still full of expectations, instantly harvesting profits.
3. Limited 'marginal benefit' of policies?
Upon closer inspection of Trump’s executive order, the U.S. government will not actively purchase Bitcoin in the market. In other words, this is more of an 'official confirmation' rather than a true whale buy. There is no substantial new demand for market liquidity. When capital cools down, this good news may be discounted.
Subsequent impact on the cryptocurrency world:
1. Long-term significance: The U.S. government including Bitcoin in its strategic reserves is an important milestone for the legitimacy and value recognition of cryptocurrencies, and may stimulate other countries to follow suit.
2. Short-term volatility is the norm: Significant fluctuations in the crypto world are common; today it drops below $85,000, and tomorrow it may rebound above $90,000, which old players have become accustomed to.
3. Regulatory framework becoming clearer: The U.S. government includes digital assets in its reserves, and subsequent regulations will be refined; compliance may become the cornerstone of a bull market.
4. 'Digital Fort Knox' under scrutiny: The U.S. government holds a large amount of Bitcoin, facing the game of 'regulation and interests,' needing to balance the prosperity of the crypto market with the status of the U.S. dollar.
Conclusion:
This time, Trump’s 'strategic Bitcoin reserve' executive order seems beneficial but has triggered a significant plunge in the cryptocurrency market in the short term. The crypto world never lacks drama:
• On one side, governments and capital giants are 'landing' on Bitcoin;
• On the other hand, retail investor sentiment and capital games are being played out in succession.
Trump signing the executive order to establish a Bitcoin strategic reserve marks a milestone in U.S. digital asset policy, fulfilling campaign promises while endorsing the long-term value of Bitcoin. However, the short-term market drop indicates that subtle differences between investor expectations and policies can create waves in the crypto market. This could be a new starting point for Bitcoin; whether its status as 'digital gold' can be solidified awaits to be seen after audits and regulations are implemented.
