The U.S. government recently revealed its strategic bitcoin reserve plan, owning over 198,000 bitcoins valued at approximately $17 billion. This announcement came shortly before the inaugural White House Crypto Summit. The government also holds about 56 ether tokens, worth nearly $119 million, as part of its digital asset stockpile. These assets were primarily acquired through forfeiture proceedings and past law enforcement actions, ensuring no cost to taxpayers.
Bitcoin's price experienced a 3% decline, settling at $87,586.86, according to Coin Metrics. Earlier this week, bitcoin briefly touched the crucial $90,000 mark, but concerns over the U.S. government's lack of immediate plans to purchase additional bitcoin led to investor sell-offs. The crypto market has faced turbulence due to ongoing tariff wars and inflation worries.
The announcement of the bitcoin reserve coincided with former President Trump's tease of the plan's details. While the reserve aims to bolster the United States' digital currency position, it will not involve further acquisitions beyond those obtained through legal proceedings. This decision left some investors disappointed, as they had anticipated potential near-term buy pressure from the government.
"It is good news, but not what the market wanted in the short term," said Steven Lubka.
Lubka further commented on market sentiments, emphasizing that "people were hoping for near-term buy pressure." The anticipation of U.S. purchases initially fueled optimism among investors, but the absence of immediate buying plans has tempered expectations.
JPMorgan analysts suggest that given the broader economic uncertainties and weakening demand, a significant upward movement in crypto prices is unlikely in the near term. Bitcoin remains vulnerable to a more substantial decline toward $70,000 unless it can consistently maintain its position above $90,000.
Despite these challenges, the establishment of a strategic bitcoin reserve by the U.S. government marks a significant step in the nation's approach to digital currencies. The reserve comprises bitcoins already in government possession from previous law enforcement seizures and does not entail any additional taxpayer expenses.