Topline
President Donald Trump’s announcement Sunday he will oversee the creation of a “crypto strategic reserve” drew notable skepticism from some big names in crypto and tech— key parts of Trump’s base last year—as an immediate surge in crypto trading came back to earth Monday.
Trump gives a keynote speech at the Bitcoin 2024 conference last summer.
Key Facts
Trump said he will direct a reserve including bitcoin, ethereum, XRP, Solana and Cardano to “make sure the U.S. is the Crypto Capital of the World,” echoing his campaign trail promises of becoming the most pro-crypto president ever.
The announcement faced an unusual amount of skepticism among crypto and tech bigwigs, with much of the questioning centered on the decision to include assets other than “digital gold” bitcoin in the fund, and whether the idea of government purchasing of crypto oversteps the typical boundaries of a laissez-faire government.
Coinbase CEO Brian Armstrong, the richest American in crypto with a $9.6 billion net worth,, wrote on X the “best option” for the reserve would be for “just bitcoin” to be the “successor to gold” for the government.
Joe Lonsdale, the billionaire cofounder of artificial intelligence-focused defense contractor Palantir who’s an unabashed supporter of Trump, was even harsher, replying to Trump’s post that it’s “wrong to tax me for crypto bro schemes” and it’s “not the proper, principled role of government” to finance a crypto reserve.
Notably, there was also significant pushback from those associated with Trump’s “crypto czar” David Sacks.
Jason Calacanis, Sacks’ co-host on the “All-In” Silicon Valley podcast, dubbed the move the “Trump Pump” and evidence of “insane grift,” while Jeff Park, a strategist at the crypto index fund manager Bitwise in which Sacks’ venture capital firm was an early investor, called the inclusion of coins other than bitcoin a “huge political miscalculation by Trump.
Crypto Reserve Rally Fizzles
Trump’s announcement sent prices surging initially for all five digital assets he named, led by bitcoin’s more than 10% rally to more than $95,000. Though each of the tokens remained up since before the reserve news, all five dropped at least 3.5% from 7 p.m. EST to 10:40 a.m., when bitcoin traded just below $90,600.
News Peg
Trump’s “announcement received a mixed response from the crypto community, despite the resounding ‘number go up’ market response,” analysts from Bernstein, arguably the most mainstream group covering digital asset industry, wrote in a Monday note to clients. The Bernstein analysts led by Gautam Chhugani noted there are several “material unresolved questions” involving the reserve, including how the fund will choose to allocate across tokens, whether Trump has the proper legal authority to establish the reserve and, most crucially, how the government will fund the reserve. Buying digital assets other than bitcoin from Federal Reserve or Treasury funds will be a “difficult sell,” according to the analysts, who noted “the rationale” to hold non-bitcoin tokens “is unclear.” The overall bullish Bernstein group continued that “crypto skeptics can cringe all along, but it remains hard to ignore,” maintaining their $200,000 price target for bitcoin.
Surprising Fact
Social media users resurfaced a 2021 post from Sacks that seemingly undressed the idea of the federal government establishing a crypto reserve: “The problem with government as a capital allocator is that the money goes to special interests who have the ability to lobby but not to innovate.”
Chief Critic
Singapore-based QCP Capital attributed the timing of Trump’s reserve announcement to the recent selloff in risk assets including stocks and crypto, writing in a Monday note: “The political calculus was clear — Trump needed a win before his approval ratings start slipping, a metric he likely takes very personally.”
Big Number
About $135 million. That’s how much the crypto industry’s super political action committee Fairshake and its affiliates spent on the 2024 election. Much of the PAC’s funding was from roughly $45 million donations from Coinbase and XRP parent Ripple Labs and more than $20 million from venture capital firm Andreessen Horowitz. Billionaires Armstrong, Marc Andreessen and Gemini founders Cameron and Tyler Winklevoss also donated at least $1 million apiece to the PAC. Andreessen and the Winklevoss twins were among the most notable billionaire donors to Trump’s election efforts.
