19h05 ▪
5
min read ▪ by
Donald Trump sparked an uproar by announcing that the strategic reserve of bitcoin would also include other cryptocurrencies.
Bitcoin – not crypto
We witnessed a backlash this weekend following the controversial tweet from the American president on his social network (Truth Social):
An American reserve of cryptos will strengthen this important industry that has suffered attacks from the Biden government for years. That’s why my decree on digital assets orders the presidential task force to advance on a “Crypto Strategic Reserve including XRP, SOL, and ADA.
Faced with the misunderstanding, Donald Trump declared two hours later that “BTC and ETH will obviously be at the heart of the reserve. I also love Bitcoin and Ethereum!”
This announcement is surprising since the president had only spoken about “Bitcoin Stockpile” during his campaign. This suddenly inclusive attitude is less surprising when we know that his son Eric Trump tweeted at the beginning of February:
In my opinion, this is the right time to increase exposure to Ethereum. You’ll thank me later.
The tweet was later edited to remove the second sentence. On the same day, the family business World Liberty Financial transferred over 212 million dollars in ETH to Coinbase Prime… Eric Trump holds shares in World Liberty Financial and also owns BTC, ETH, SOL, and other cryptocurrencies.
Not to mention the Trump Coin or Melania Coin, two memecoins whose collapse was swift. The Trump coin melted down 80% in less than a month.
Rain of Criticism
Many believe that Donald Trump and his team orchestrate these pumps to thank certain campaign donors. Moreover, White House advisor David Sacks is not new to this game, by his own admission, the “Crypto Tsar”.
In this 2021 video, David Sacks and Chamath Palihapitiya boast about having bought huge amounts of Solana intending to dump them on small holders. Solana was at the time nicknamed “Sam’s coin”, in honor of FTX CEO Sam Bankman-Fried who even promoted it to his prison guards.
David Sachs defended himself by claiming to have liquidated all his “direct positions including BTC, SOL, and ETH” before taking office in the Trump government. However, he would still hold indirect positions through his shares in Bitwise, one of whose flagship products is the “Bitwise 10 Crypto Index Fund”…
Even Peter Schiff felt compelled to step forward to defend bitcoin:
“Even though I am against it, I understand the rationale for a bitcoin reserve. We already have a gold reserve, and since bitcoin is digital gold, that is, gold in a better form, why not create a bitcoin reserve too. But what is the rationale for a XRP reserve? Why on earth would we need it?”
Brian Armstrong, CEO of Coinbase, also expressed surprise. “Bitcoin would probably be the best option. The selling argument is the simplest and clearest as a successor to gold”, he stated on X.
Exit liquidity…
In just 3 hours, the market capitalization of the cryptocurrency market swelled by 300 billion dollars. A good part of these gains came from bitcoin which regained the 94,000 $ effortlessly.
We witnessed the first daily candle of 10,000 $. Attention now turns to the opening of US Bitcoin ETFs which may eventually reclaim the 100,000 dollars.
Of course, the cryptocurrencies mentioned by Donald Trump also soared. Cardano (ADA) jumped by +64% while XRP and Solana gained +30% and +21%. But could this be the dead cat bounce?
It is not unlikely that we might finally witness a pullback. It could be that Donald Trump makes such a request to ensure Congress at least agrees to create a bitcoin reserve.
Furthermore, Commerce Secretary Howard Lutnick, who oversees the US sovereign fund, is rather in the “maximalist” camp. The soufflé of these cryptos would fall flat if the strategic reserve were to consist of 95% bitcoin…
Let us also remember that Senator Cynthia Lummis, who heads the powerful Senate Banking Committee, is a maximalist. Her bill proposing to buy at least one million bitcoins is called the “Bitcoin Act“, and not the “Crypto Act”.
In this regard, note that Elon Musk recently followed the senator on X and that his companies Tesla and Starlink exclusively own bitcoins…
In summary, be cautious. Giving in to euphoria for any other cryptocurrency than bitcoin remains risky. Don’t miss our article Bitcoin: The Shocking Predictions from River.
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Bitcoin, geopolitical, economic and energy journalist.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
