Bitcoin’s price dropped after Trump’s executive order establishing a U.S. strategic bitcoin reserve. Why did the market react this way, and what’s next for BTC? Explore key insights, investor sentiment, and future price predictions.

Cryptocurrencies remained relatively stable on Friday following President Donald Trump’s signing of an executive order to create a strategic bitcoin reserve for the United States.

This move marks a significant step in government engagement with digital assets but fell short of the aggressive accumulation strategy some investors had anticipated.

The Details of the Bitcoin Reserve

The reserve will include bitcoin already owned by the government, primarily acquired through law enforcement seizures. Notably, the order did not outline a purchasing strategy, which disappointed market participants who had hoped for imminent government acquisitions to drive prices higher.

White House crypto and AI czar David Sacks clarified on social media that the bitcoin reserve will comprise digital assets obtained through forfeiture proceedings and emphasized that this approach would not impose additional costs on taxpayers.

Current estimates place the U.S. government’s bitcoin holdings at over 198,000 BTC, valued at approximately $17 billion. Additionally, the U.S. owns around 56 Etherium (ETH) tokens worth close to $119 million, although there were no specifics on holdings of XRP, Solana’s SOL, or Cardano’s ADA.

Market Reactions and Investor Sentiment

Despite initial optimism following Trump’s announcement, bitcoin’s price dropped by about 5% before stabilizing around $88,949.16.

The lack of new demand and uncertainty regarding future government actions have contributed to price stagnation. Analysts believe that unless a new catalyst emerges, bitcoin prices are likely to remain within a stable range in the near to medium term.

Steven Lubka, head of private clients at Swan Bitcoin, noted that while the executive order is a positive sign of institutional support for crypto, it did not create the expected short-term buying pressure.

Similarly, TD Cowen’s Jaret Seiberg described the order as a moderate step rather than an aggressive government-backed accumulation of bitcoin.

White House Crypto Summit and Policy Outlook

The announcement came on the eve of the first White House Crypto Summit, where policymakers and industry leaders gathered to discuss the future of digital assets.

Treasury Secretary Scott Bessent underscored the importance of the U.S. halting bitcoin sales before developing an acquisition plan, stating, “The first step is to stop selling, and then we’re going to put a plan in place from there.”

The Treasury Department has 60 days to assess whether legislative action is required to implement parts of the order.

Trump’s executive order also establishes a U.S. Digital Asset Stockpile, which will consist of non-bitcoin digital assets seized in criminal or civil cases. While this move signals official recognition of cryptocurrencies, it stops short of government-backed market intervention.

Macroeconomic and Market Implications

Bitcoin’s price movements have increasingly mirrored traditional risk assets, such as technology stocks. After reaching a record high of $109,000 in January, bitcoin has experienced volatility, falling below $80,000 in February amid global economic concerns, including Trump’s tariff policies.

JPMorgan analysts have suggested that macroeconomic uncertainty and weakening demand could limit bitcoin’s near-term upside potential.

Investors remain cautious as inflation, interest rates, and trade tensions continue to impact the broader financial markets. Bitcoin briefly touched $90,000 earlier this week but failed to sustain gains, with resistance levels around $92,000.

What’s Next for Bitcoin?

Several key factors will determine bitcoin’s next moves:

1. $90,000 as a critical support level: If bitcoin holds above this threshold, a retest of $92,000 and $95,000 could be possible.

2. Impact of the Crypto Summit: A strong pro-bitcoin policy shift could restore investor confidence, while vague commitments may lead to further price declines.

3. Federal Reserve rate decisions: Speculation over potential rate cuts could influence risk assets, including bitcoin.

Conclusion

While the establishment of a strategic bitcoin reserve represents a milestone in the U.S. government’s approach to digital assets, the market’s reaction has been lukewarm. Investors are awaiting more definitive policy actions before committing to new positions.

If the government signals a stronger embrace of bitcoin, it could provide the momentum needed to push prices above $95,000. However, if regulatory uncertainty persists, bitcoin may remain range-bound or face further downside pressure.