Trump Announces Cryptocurrency Reserve, Boosting Market Prices

U.S. President Donald Trump took to social media to unveil five digital assets he plans to include in a new U.S. strategic cryptocurrency reserve, causing a surge in their market values.

In a post on Truth Social, Trump stated that his executive order from January on digital assets would lead to the accumulation of cryptocurrencies such as Bitcoin, Ethereum, XRP, Solana, and Cardano. This marked the first time the specific assets were disclosed.

An hour later, Trump clarified, adding, "And, obviously, BTC and ETH, as other valuable cryptocurrencies, will be at the heart of the Reserve."

Crypto Market Surges Following Announcement

Bitcoin, the world's largest cryptocurrency by market cap, saw an 11% increase, reaching $94,164 on Sunday afternoon. Ethereum followed with a 13% rise, trading at $2,516. The overall cryptocurrency market jumped by 10%, adding over $300 billion in value, according to data from CoinGecko.

XRP, the token developed by Ripple Labs, also gained traction. Ripple recently funded a super PAC aimed at influencing congressional elections in favor of crypto-friendly policies, as reported by Reuters.

Industry Experts Weigh In

Federico Brokate, head of U.S. business at 21Shares, a digital asset investment firm, highlighted the significance of the move. "This signals a shift toward active government participation in the crypto economy," he said. "It could accelerate institutional adoption, improve regulatory clarity, and solidify the U.S.’s leadership in digital assets."

Meanwhile, James Butterfill, head of research at CoinShares, expressed surprise at the inclusion of cryptocurrencies beyond Bitcoin. "Unlike Bitcoin, these assets resemble tech investments," he remarked. "The decision indicates a more nationalistic approach to crypto technology, without emphasizing the fundamental qualities of these assets."

Trump Strengthens Ties with Crypto Industry

The crypto industry has thrown its support behind Trump’s 2024 re-election campaign, and he has swiftly taken steps to align with their interests. He is set to host the first White House Crypto Summit on Friday, and his family has also introduced its own digital assets.

Under the previous administration led by Joe Biden, regulators implemented stringent measures to curb fraud and money laundering in the crypto sector. However, under Trump, the SEC has rolled back several investigations into crypto firms and dismissed a lawsuit against Coinbase (NASDAQ:COIN), the leading U.S. crypto exchange.

Market Outlook and Future Projections

Despite the recent bullish momentum, major cryptocurrencies have seen significant pullbacks in recent weeks, erasing gains made after Trump’s election victory initially fueled optimism in the industry. Analysts suggest that for the market to sustain an upward trajectory, key factors such as a Federal Reserve interest rate cut or a well-defined pro-crypto regulatory framework from the Trump administration will be crucial.

According to Reuters, Geoff Kendrick, an analyst at Standard Chartered (OTC:SCBFF), has projected Bitcoin could soar to $500,000 before Trump’s term concludes, compared to its current record high of $109,071.

Regulatory filings reveal that while hedge funds remain dominant buyers of crypto assets, banks and sovereign wealth funds have also increased their exposure. Reports indicate that institutional investors boosted allocations to U.S. ETFs linked to Bitcoin spot prices in Q4 2024.

Will Legislation Be Required?

Legal experts and analysts remain divided on whether establishing the reserve will require congressional approval. Some believe the U.S. Treasury’s Exchange Stabilization Fund could be leveraged to acquire cryptocurrencies, bypassing the need for legislative action.

Trump’s crypto advisory group has also explored the possibility of using seized cryptocurrencies from law enforcement operations to fund the reserve.

Stay tuned for further updates as regulatory frameworks and institutional adoption continue to evolve in the cryptocurrency landscape.

(Sources: investing.com, reuters.com)