Trump's Bitcoin Reserve Plan Douses Altcoin Hopes, Triggering 9% Slump
Major cryptocurrencies including XRP, Dogecoin (DOGE), and Cardano (ADA) experienced a significant downturn, dropping as much as 9%. This decline followed President Donald Trump's announcement to establish a Bitcoin Strategic Reserve, explicitly excluding other major tokens. The move has disappointed traders who had anticipated broader inclusion, leading to substantial liquidations in the crypto futures market.
Key Takeaways
- XRP, DOGE, and ADA saw price drops of up to 9% after President Trump's decision to create a Bitcoin Strategic Reserve.
- Over $400 million in bullish crypto futures bets were liquidated, with Bitcoin products accounting for a significant portion.
- Traders are now looking towards the upcoming White House Crypto Summit, but expectations for substantial positive impact are low.
Trump's Strategic Reserve Announcement
President Trump directed his administration on Thursday to establish a Bitcoin Strategic Reserve, which will hold bitcoin previously seized by the government. An additional "crypto stockpile" will also be created, comprising any other cryptocurrencies the government seizes in the future. This decision effectively ended the bullish momentum that had been building on the back of earlier comments suggesting a more diversified approach to a U.S. strategic crypto reserve, which had included tokens like XRP, ADA, Ether (ETH), and Solana (SOL).
Market Reaction and Liquidations
The exclusion of popular altcoins from the reserve plan has led to a sharp sell-off. Dogecoin, in particular, had seen a surge of up to 12% earlier in the week, partly fueled by hopes of its inclusion in the reserve and the NYSE Arca filing for a Bitwise DOGE ETF. Bitcoin itself was not immune to the broader market sentiment, dipping 4.5% from its 24-hour high. The CoinDesk 20 (CD20) index, which tracks the largest cryptocurrencies by market capitalization, fell 5%, while smaller altcoins experienced even steeper declines of up to 10%.
The market's reaction was swift, triggering over $400 million in liquidations on bullish bets in crypto futures. Bitcoin-tracked products bore the brunt of these liquidations, accounting for approximately $230 million.
Outlook and Upcoming Summit
Traders are now shifting their focus to the White House Crypto Summit, scheduled for Friday. However, sentiment remains cautious, with low expectations for significant positive catalysts. Nick Ruck, director at LVRG Research, noted that the strategic reserve announcement failed to meet expectations, and President Trump has not made substantial promises regarding the summit that could counteract the prevailing risk-off sentiment. Despite this, some traders are holding out hope for surprise announcements or direct engagement between Trump and blockchain industry leaders who are expected to attend the summit.