Bitcoin saw a sharp decline of up to 6.5% on Monday, briefly dropping to $80,650 before recovering some losses. By early morning trading, BTC stood at $82,050, reflecting a 0.74% dip. The downturn follows President Donald Trump’s executive order establishing a U.S. strategic bitcoin reserve, a move that left many investors disappointed due to its limited scope.

Market Reaction to Trump’s BTC Reserve Plan

Trump’s executive order outlines that the U.S. will build its bitcoin reserve using BTC seized in criminal and civil forfeiture cases. However, it does not include direct government purchases of bitcoin, leading to skepticism among traders who had anticipated a more aggressive accumulation strategy.

Crypto markets responded with heightened volatility. Ether and XRP initially fell around 7.5% before rebounding into positive territory. Meanwhile, Bitcoin remains under pressure, continuing a three-day losing streak that has seen its value drop over 10% from last week’s highs of $92,800.

Some analysts believe the market overreacted. Matt Hougan, CIO at Bitwise Asset Management, suggested to CNBC that while traders are currently bearish, the long-term implications of the executive order could be bullish. Hougan argued that the establishment of a bitcoin reserve legitimizes BTC as a strategic asset, potentially encouraging other governments to follow suit.

David Sacks, White House Crypto and AI Czar, hinted at “budget-neutral strategies” for acquiring additional bitcoin in the future, provided they do not impose extra costs on American taxpayers. These remarks suggest that further expansion of the reserve remains a possibility, although details are unclear.

Macroeconomic Concerns Weigh on Bitcoin

Beyond Trump’s announcement, broader economic concerns are also impacting bitcoin’s price. A looming trade war between the U.S. and China, with Beijing imposing tariffs on American agricultural imports, has injected uncertainty into financial markets. Additionally, the Federal Reserve’s cautious stance on interest rates, coupled with weak job market data, has shifted investor focus away from crypto-related developments.

Analysts at IntoTheBlock noted that while Trump’s bitcoin reserve plan was positive news for the industry, macroeconomic headwinds have overshadowed its impact. The growing correlation between BTC and traditional assets like stocks suggests that external factors will continue to influence price movements in the near term.

Bitcoin is currently testing its 200-day simple moving average (SMA), a crucial technical level. Previous dips below this threshold on Feb. 28 and March 2 saw strong buying support, leading to price rebounds. Traders will be watching closely to see if BTC can hold above this level or if further declines are ahead.

Looking Ahead

Despite short-term turbulence, some experts remain optimistic about bitcoin’s long-term trajectory. If the U.S. government expands its BTC holdings in the future, this could reinforce bitcoin’s role as a key geopolitical asset. For now, traders will need to navigate ongoing volatility and macroeconomic uncertainty as they assess the broader impact of Trump’s crypto policy.

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