Trump Announces Inclusion of Major Cryptocurrencies in Proposed U.S. Strategic Reserve
Investment Impacts and Market Reactions Follow Announcement
WEST PALM BEACH, Florida, March 2 (Reuters) — In a significant development for the cryptocurrency market, former U.S. President Donald Trump has revealed plans to include five major digital assets—Bitcoin, Ether, XRP, Solana, and Cardano—in a proposed U.S. strategic reserve for cryptocurrencies. This announcement, made via a post on Truth Social, sparked a notable surge in the valuation of these cryptocurrencies, reflecting the market’s immediate reaction to Trump’s intentions.
Details of the Announcement
On Sunday, Trump mentioned in his social media post that the strategic reserve aligns with his earlier executive order from January aimed at developing a comprehensive framework for digital assets in the United States. "BTC and ETH, as other valuable cryptocurrencies, will be at the heart of the Reserve," he added in a follow-up post, emphasizing the central role of Bitcoin and Ether in this initiative.
The market responded favorably to the news; Bitcoin, the largest cryptocurrency by market capitalization, surged over 11% to approximately $94,164. Ether followed suit, climbing nearly 13% to about $2,516. The overall cryptocurrency market expanded by about 10%, increasing in value by more than $300 billion since Trump’s announcement, as reported by CoinGecko, a cryptocurrency data and analysis firm.
Implications for the Crypto Industry
"This move signals a shift toward active participation in the crypto economy by the U.S. government," stated Federico Brokate, head of U.S. business at 21Shares, a digital asset investment management firm. He noted that this initiative could accelerate institutional adoption, clarify regulatory perspectives, and bolster the U.S.’s position within the rapidly evolving digital asset landscape.
James Butterfill, head of research at asset manager CoinShares, expressed surprise at Trump’s inclusion of cryptocurrencies beyond Bitcoin. According to him, while Bitcoin is viewed as a store of value, other assets like Solana and Cardano are perceived more as technology investments. "The announcement suggests a more patriotic stance toward the broader crypto technology space," Butterfill commented.
Political and Regulatory Context
Trump’s backing for the cryptocurrency industry aligns with his 2024 election campaign, where he has sought to garner support from the digital asset community. He has also planned the first White House Crypto Summit for this coming Friday and is reported to be launching a family of cryptocurrency tokens.
In contrast, the previous administration under President Joe Biden implemented tighter regulations aimed at safeguarding consumers against fraudulent practices within the crypto industry. Recent actions from regulators include the Securities and Exchange Commission (SEC) withdrawing investigations into several cryptocurrency companies and terminating a lawsuit against Coinbase, the largest crypto exchange in the U.S.
Despite the positive momentum surrounding Trump’s announcement, the cryptocurrency market has faced significant downturns recently, with valuations of major digital currencies plummeting. Analysts believe that for a sustained recovery, clear frameworks from the Trump administration regarding cryptocurrency regulation or hints about potential interest rate cuts from the Federal Reserve may be necessary.
Future Considerations and Market Predictions
Looking forward, Standard Chartered analyst Geoff Kendrick has made headlines by predicting that Bitcoin could potentially reach $500,000 before Trump’s term concludes, compared to its all-time high of $109,071. Increasingly, institutional investors, including hedge funds, banks, and sovereign wealth funds, have shown growing interest in cryptocurrencies, as evidenced by bolstered allocations to U.S. Exchange-Traded Funds (ETFs) linked to Bitcoin.
Discussions continue regarding the necessary legislative action to establish the cryptocurrency reserve. While some experts argue that Congress may need to intervene, there are opinions suggesting that the reserve could be formed through the U.S. Treasury’s existing Exchange Stabilization Fund, designed to intervene in foreign currency markets.
As Trump moves to reshape the narrative around digital assets in America, the implications for the crypto industry and broader financial markets are yet to fully unfold.
Reporting by Trevor Hunnicutt in West Palm Beach, Florida; Katharine Jackson in Washington, and Jessica DiNapoli in New York. Editing by Bill Berkrot and Lisa Shumaker.
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