Bitcoin dived to a three-month low on Tuesday, while MicroStrategy has tumbled to where it was on Nov. 7, wiping out almost its entire Trump-election rally. Last week's news of the biggest crypto heist on record dampened sentiment in the overall sector. In addition, talk of U.S. government purchases sending bitcoin to the moon has quieted down, at least for now.
There's much uncertainty about how aggressive the Trump administration will be in supporting bitcoin and cryptocurrencies, and the timing of any actions looks likely to be more drawn out than crypto traders initially hoped.
The bitcoin price is sinking even as gold has recently climbed to a record. Bitcoin soared on Trump speculation, and the hacking news helped prick that balloon. Crypto exchange Bybit said $1.5 billion worth of cryptocurrency was stolen last week, reportedly by North Korean hackers.
Trump Executive Order
Bitcoin touched a record high just above $109,000 on Jan. 20 amid news that President Trump's initial flurry of executive orders would include one on cryptocurrencies. Excitement was off the charts about what Trump would mean for bitcoin and other cryptocurrencies after Trump launched his own meme coin on the Solana blockchain just days before his inauguration.
The Trump coin slid to $13 on Tuesday from a peak above $46 on Jan. 17. The Trump coins in circulation have a value of $2.6 billion.
It would have been hard for the executive order released Jan. 23 to live up to expectations. The order created a working group led by the Treasury secretary, the Attorney General and the Securities and Exchange Commission chair tasked with delivering a report within 180 days. The report will recommend regulatory and legislative proposals governing the issuance of digital assets, including stablecoins.
Trump also instructed them to evaluate the "potential creation and maintenance of a national digital asset stockpile." Such a stockpile could comprise cryptocurrencies seized by federal law enforcement.
Strategic Bitcoin Reserve
During the campaign, Trump discussed a $20 billion bitcoin reserve and indicated after his election that the idea was still on the table.
Rep. Cynthia Lummis, Wyo.-R, proposed that the U.S. government buy 1 million bitcoin over five years, which would cost $87.5 billion at today's price. That would require buy-in from Congress, and there's no indication that bitcoin purchases will be part of the initial reconciliation package of tax and spending cuts.
Short of action by Congress, cryptocurrency insiders have proposed that Trump could instruct the Treasury Department's Exchange Stabilization Fund to buy bitcoin or other cryptocurrencies.
Lummis and other bitcoin believers highlighted Trump's Feb. 3 executive order on creating a sovereign wealth fund as a "big deal" for bitcoin, saying it could be used to accumulate cryptocurrencies.
Treasury Secretary Scott Bessent said that the executive order could lead to the creation of a sovereign wealth fund within the next 12 months. Trump said the fund might participate in a TikTok acquisition to avert a shutdown of the social media app.
Bitcoin Price, MSTR
The bitcoin price tumbled to $87,300 on Tuesday morning, down nearly 8% over the past 24 hours. Bitcoin has given up about 40% of ts advance since early September, when it traded around $54,000. The bitcoin price stood around $69,000 on Nov. 4, the eve of Election Day.
MicroStrategy plunged 8.4% to 258.99 in Tuesday morning stock market action. MSTR soared as high as 543 in weeks after the election. MicroStrategy hasn't closed below the current price since Nov. 5.
In an SEC filing, the company said it bought 20,356 bitcoins last week at an average price of $97,514. The company now holds 499,096 bitcoins at an average price of $66,357. That means it's sitting on a $10.4 billion profit, even as it has a $52 billion market capitalization.
Among other crypto-related stocks, Robinhood Markets was off 8.7% and headed for a sixth straight decline. Coinbase Global shed 6.2%.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
