Several days ago, Mashable released an article delving into why Bitcoin and other cryptocurrencies appeared to be plummeting. Interestingly, three out of the four cited reasons were linked to actions taken by Donald Trump during his presidency. This was unexpected given Trump’s promises of being a pro-cryptocurrency president, especially after its supporters helped him secure the presidency.
However, over the weekend, Bitcoin’s value dropped by approximately 20%, prompting Trump to make an announcement that resulted in a temporary surge in the value of cryptocurrencies.
On his social media platform, Truth Social, Trump declared that the U.S. government was planning to establish a “Crypto Strategic Reserve” and start purchasing various cryptocurrencies, including Bitcoin, Ethereum, XRP, Solana, and Cardano.
Trump’s post read, “A U.S. Crypto Reserve will boost this essential industry after years of corrupt attacks by the Biden Administration, which is why my Executive Order on Digital Assets instructed the Presidential Working Group to proceed with a Crypto Strategic Reserve that includes XRP, SOL, and ADA. I will ensure the U.S. becomes the Crypto Capital of the World. We are MAKING AMERICA GREAT AGAIN!”
The cryptocurrency market responded positively to Trump’s announcement, with Bitcoin’s value rising from the $85,000 range to the $95,000 range, breaking the downward trend the crypto market had been experiencing.
Nonetheless, Trump’s move sparked criticism, as using taxpayer money to purchase cryptocurrencies seemed like an odd strategy for an administration that was leading a cost-cutting initiative spearheaded by Elon Musk.
David Sacks, White House AI and crypto czar, responded to these critics by stating, “Nobody announced a tax or a spending program. Maybe you should wait to find out what’s actually being proposed.” However, Sacks, a venture capitalist from Silicon Valley, didn’t elaborate on the specifics of the proposal.
While Bitcoin and Ethereum are well-known, the other three cryptocurrencies mentioned by Trump cater to very specific crypto audiences. Solana, for instance, is most recognized as the platform where many meme coins are created, including Trump’s controversial meme coin. Some crypto advocates even questioned Trump’s decision to include XRP and ADA due to concerns about centralization and the absence of stablecoin issuers.
Interestingly, Sacks, an early investor in Solana, had a considerable amount of Solana crypto holdings. Although he claims to have sold off all his crypto holdings, questions remain about his venture capital firm, Craft Ventures, and its ties to the five specific cryptocurrencies.
Craft Ventures invests in crypto companies such as Bitwise, a crypto asset manager with significant crypto holdings. Coincidentally, its top five cryptocurrency holdings are Bitcoin, Ethereum, XRP, Solana, and Cardano.
The full impact of Trump and Sacks’ plans remains to be seen, but initial indications do not seem promising. Most cryptocurrencies have gone back to their trading levels before Trump’s announcement, indicating that his attempt to aid the crypto markets was only a temporary fix.
