Trump names cryptocurrencies in strategic reserve, sending prices up

In a recent post on Truth Social, U.S. President Donald Trump revealed details about his executive order on digital assets issued in January, stating that it would establish a national reserve of various cryptocurrencies. The reserve is set to include bitcoin (BTC), ether (ETH), XRP, solana (SOL), and cardano (ADA)—the first time specific assets have been publicly named as part of the plan.

More than an hour after his initial post, Trump followed up, emphasizing that bitcoin and ether would be the "heart of the Reserve," underscoring their central role in the initiative.

Following Trump's announcement, the cryptocurrency market experienced a surge in value. Bitcoin, the largest cryptocurrency by market capitalization, jumped over 11% to $94,164 on Sunday afternoon, while ether rose about 13% to $2,516. The overall crypto market added over $300 billion in value, reflecting a roughly 10% increase, according to data from CoinGecko.

XRP, one of the digital assets mentioned, is the token associated with Ripple Labs. The company has been actively involved in U.S. politics, backing a super PAC aimed at influencing congressional elections in favor of cryptocurrency-friendly policies, as reported by Reuters.

Market experts view this move as a significant shift in the U.S. government's approach to cryptocurrency. Federico Brokate, head of U.S. business at 21Shares, a digital assets investment management firm, described it as a turning point. He noted that the policy could accelerate institutional adoption of crypto, provide greater regulatory clarity, and reinforce U.S. leadership in the digital asset sector.

However, some analysts expressed surprise at the inclusion of cryptocurrencies beyond bitcoin. James Butterfill, head of research at CoinShares, pointed out that unlike bitcoin, many of these assets function more like technology investments. He suggested that the decision signals a broader pro-crypto stance by the Trump administration, potentially prioritizing American-led crypto innovations over traditional financial considerations.

Trump's support for the crypto industry has been evident throughout his 2024 election campaign, earning him backing from major players in the sector. Since returning to the White House, he has taken swift action to support crypto-friendly policies, including hosting the first-ever White House Crypto Summit scheduled for Friday. Additionally, his family has entered the crypto space by launching their own digital tokens.

This approach marks a stark contrast to the regulatory environment under former President Joe Biden, whose administration cracked down on the crypto industry to combat fraud and money laundering. Under Biden, the Securities and Exchange Commission (SEC) aggressively pursued lawsuits against crypto firms. However, Trump's SEC has since withdrawn several investigations and dismissed a lawsuit against Coinbase, the largest U.S.-based crypto exchange.

Despite Trump's favorable policies, the crypto market has faced downward pressure in recent weeks. Many digital currencies have erased nearly all of the gains made after Trump's election victory initially fueled excitement among investors. Analysts believe that for the market to regain momentum, key drivers such as interest rate cuts from the U.S. Federal Reserve or a clear regulatory framework from the Trump administration will be necessary.

A recent Reuters report highlighted that Geoff Kendrick, an analyst at Standard Chartered, has projected that bitcoin could reach $500,000 before the end of Trump's term, far surpassing its previous all-time high of $109,071. Meanwhile, regulatory filings in the U.S. indicate that institutional interest in crypto remains strong, with hedge funds leading as dominant buyers, followed by banks and sovereign wealth funds.

Quarterly reports also showed that asset managers significantly increased their holdings in U.S.-based spot bitcoin exchange-traded funds (ETFs) during the fourth quarter of 2024.

Legal experts remain divided on whether congressional approval will be required to establish the national crypto reserve. Some argue that the U.S. Treasury’s Exchange Stabilization Fund (ESF), traditionally used for managing foreign currency reserves, could be leveraged for the initiative without requiring legislative approval.

Trump's team had also been exploring the possibility of building the reserve using cryptocurrencies seized in law enforcement actions, a strategy that could provide an initial supply of digital assets for the stockpile.

As the administration moves forward with its ambitious crypto strategy, all eyes are on how regulatory policies will unfold and whether the digital asset reserve will materialize as envisioned.