The big three cryptocurrencies are on the move today. Bitcoin (BTC 2.31%), Ethereum (ETH 2.14%), and Dogecoin (DOGE 1.73%) are up 2.3%, 2.6%, and 1.7%, respectively, as of 12:30 p.m. ET. Earlier in the day, however, they were up as much as 6.1%, 5.5%, and 4.4%.
The three followed a general uptick in the market as a whole, with the S&P 500 (^GSPC 1.24%)
up 0.2% and the Nasdaq Composite (^IXIC 1.62%) up 0.3% on the day.
A possible reprieve?
All three saw a boost after comments from the U.S. Commerce Secretary gave investors hope that escalating trade tensions with China, Canada, and Mexico could cool down. Steep tariffs on goods from all three countries went into effect on Tuesday, ending a monthlong pause on those directed at Mexico and Canada. Producers in those two countries now face a 25% duty, while Chinese goods now carry a 20% duty.
However, yesterday, U.S. Commerce Department chief Howard Lutnick told reporters that President Trump could move to exempt critical categories and reduce the burden on products like autos, and today, he gave automakers a one-month exemption. The news helped boost Bitcoin, Ethereum, and Dogecoin.
A crypto reserve could be coming
On Sunday, President Trump announced on Truth Social that he intends to establish a strategic reserve of cryptocurrencies, naming five specific coins that could be included: Bitcoin, Ethereum, Cardano, Solana, and XRP. While Trump had already issued an executive order that called for a “stockpile” of digital assets, this proposal of a “reserve” is markedly different. The former would be made up of assets already seized by federal law enforcement, while the latter implies that the federal government would actually invest tax dollars directly into building up a reserve.
A hotly anticipated meeting on Friday will reveal more of the president’s plan. Bitcoin especially is seeing a boost; although Ethereum was included in Trump’s tweet, many believe that if a reserve is made real, it would only include Bitcoin. Other cryptocurrencies like Ethereum could still be included, but may be a harder sell. Lutnick told reporters, “The president definitely thinks that there’s a Bitcoin strategic reserve.” Still, it’s possible that Ethereum and others get the nod as well.
Dogecoin was absent from Trump’s post, but that didn’t stop investors from speculating on the possibility it could be included. Trump’s close ally Elon Musk has been a vocal fan of Dogecoin; his Department of Government Efficiency (DOGE) is so named because of this affinity. Some investors believe this close relationship could lead to its inclusion eventually, however, that this is pure speculation at this point.
Macro trends don’t look great
Cryptocurrencies are still highly volatile assets, especially meme coins like Dogecoin. This means that they are likely to perform poorly in the face of a worsening economy. There have been troubling signs as of late as to the direction of the economy, with many reputable sources worrying we may be headed into a recession.
Recent jobs data well underperformed projections, while the Atlanta Fed’s GDPNow — a projection model — is projecting a 2.3% retraction in GDP for the quarter. That is down from projections a month ago showing 4% growth — worrying indeed.
I think there is a good chance that the big three cryptos see a boost come Friday. That being said, given the macro environment, I don’t think now is the best time to be investing in Bitcoin, Ethereum, and especially Dogecoin — which, as a meme coin, lacks the tangible use cases of the former two.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Cardano, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.
