Major Cryptocurrencies Take a Hit
In a surprising turn of events, top cryptocurrencies such as XRP, Dogecoin (DOGE), and Cardano (ADA) saw a sharp decline of up to 9% in just 24 hours. This downturn followed President Donald Trump’s recent announcement regarding the establishment of a Bitcoin Strategic Reserve, which has significantly dampened investor enthusiasm for a diversified U.S. cryptocurrency reserve.
Trump’s Strategic Reserve Announcement
On Thursday, President Trump directed his administration to create a reserve specifically for Bitcoin (BTC) that will hold the cryptocurrency previously confiscated by the government. In addition to this, he mentioned the creation of a “crypto stockpile” containing any other cryptocurrencies that the government might seize in the future.
This announcement came as a stark contrast to the optimism that had been building in the market over the past few days, fueled by expectations that Trump would include a variety of cryptocurrencies like XRP, ADA, Ethereum (ETH), and Solana’s SOL in the reserve. The lack of broader inclusion has now diminished hopes for increased buying pressure on these assets, especially with the potential use of taxpayer funds.
Market Reactions and Liquidations
Earlier in the week, DOGE experienced a surge of up to 12% when asset manager Bitwise filed a 19-B application for an exchange-traded fund (ETF) featuring the token. Traders had speculated that DOGE might be part of the strategic reserve, but those hopes were swiftly dashed by Trump’s announcement.
Bitcoin, the focal point of the new strategic reserve, also faced a decline, dropping 4.5% from a 24-hour peak above $93,000 to below $88,000. The CoinDesk 20 (CD20), an index that tracks the leading cryptocurrencies by market capitalization, fell by 5%, while smaller altcoins suffered losses of up to 10%.
The market turmoil triggered over $400 million in liquidations on bullish positions in crypto futures, with approximately $230 million linked to Bitcoin-tracked products alone.
Looking Ahead: The White House Crypto Summit
As traders brace for the upcoming White House Crypto Summit scheduled for March 7, expectations remain subdued. Nick Ruck, director at LVRG Research, stated, “Traders have lowered expectations since the strategic reserve announcement failed to meet their hopes.” He pointed out that Trump has not promised any substantial developments for the summit that could offset the effects of ongoing trade tensions.
However, Ruck mentioned a glimmer of hope, noting that there may be potential for surprise announcements during the summit, especially given that many industry leaders and key government officials will be in attendance. This could lead to unexpected collaborations between Trump and individual blockchain companies, providing some much-needed optimism to the market.
In summary, while the recent announcements have cast a shadow over the cryptocurrency market, there remains a possibility for positive developments that could reignite interest and enthusiasm among traders.
