Cryptocurrency prices surged following President Donald Trump's unexpected announcement of plans for the U.S. government to establish a strategic reserve fund holding various digital assets. This move underscores Trump's increasing use of cryptocurrency price fluctuations as a gauge of his public support.
Trump revealed on social media his administration's intention to create a 'Crypto Strategic Reserve,' which would encompass lesser-known cryptocurrencies such as XRP, Solana, and Cardano. Subsequently, he mentioned that the reserve would also include the more widely recognized Bitcoin and Ether.
The announcement provided a temporary boost to crypto prices after recent declines. Bitcoin, for instance, was trading around $90,000 on Monday morning, having dropped below $80,000 the previous week. XRP, Solana, and Cardano experienced significant price surges post-Trump's announcement on Sunday, followed by a gradual decrease through Monday morning.
During his campaign, Trump had promised to support a 'strategic national bitcoin' reserve, which would involve Bitcoin seized by the U.S. government in law enforcement actions. Sunday's announcement marked the first instance of his advocacy for the government to hold other types of cryptocurrencies.
Details regarding the quantity of each cryptocurrency Trump proposed for the U.S. to hold, the acquisition process, and the potential inclusion of other cryptocurrencies were not immediately provided by the White House.
Eric Trump, the president's son, expressed satisfaction with the price increases, citing his recent social media advice to accumulate crypto assets. He stated, 'Hopefully, I made someone's life just a little bit better.'
Trump positioned himself as a champion of the crypto industry, alleging that it had been subjected to 'years of corrupt attacks by the Biden administration.' The industry, feeling unfairly targeted by the Biden administration, had supported Trump's election bid. His initial weeks in office witnessed several measures aimed at bolstering crypto, including halting prominent enforcement actions by the Securities and Exchange Commission.
Following Trump's election victory last year, crypto prices soared. Trump claimed credit when Bitcoin surpassed $100,000 in early December, posting 'YOU’RE WELCOME!!!' on social media.
However, prices have since declined post-inauguration, with Trump facing criticism, even from allies within the crypto industry, for his involvement in launching a personal meme coin just before taking office, which subsequently plummeted in value. The crash of meme coins associated with First Lady Melania Trump and Argentine President Javier Milei, along with a significant hack of a major cryptocurrency exchange attributed to North Korea by the FBI, have dampened enthusiasm for crypto.
The inclusion of cryptocurrencies beyond Bitcoin is anticipated to encounter resistance from certain factions within the divided cryptocurrency industry. Bitcoin, being the oldest and most dominant cryptocurrency, constitutes over half of the global crypto market cap.
Proponents of a government-held crypto reserve argue that it would diversify government assets and mitigate financial risks. Conversely, critics contend that the volatility of cryptocurrencies renders them unsuitable as reserve assets.
In addition to Sunday's announcement, Trump recently disclosed plans to convene and engage with industry leaders at a White House 'Crypto Summit' scheduled for Friday.
