The US BTC plan seems to have run into an early headwind, sending Bitcoin to its lowest since November. Escalating tariff-war tensions are stirring fears of a looming recession amid a growing wave of pro-crypto announcements from Trump’s White House.
According to a Bloomberg report, the price of Bitcoin fell sharply on Monday, just a few days following an executive order signed by Donald Trump to solidify the US BTC plan to create a strategic reserve for the digital asset.
Investors Disappointed
The price of Bitcoin slipped up to 6.5% during Monday trading to trade at around $80,650 before stabilizing at around $82,050 later in the day. Investors who had hoped that the announcement of the US BTC plan would pump up prices were disappointed that the government didn’t initiate an aggressive program to buy more Bitcoin from the market. Instead, the program would be funded by the BTC holdings seized by the government from criminal and civil forfeitures, with no immediate plans to buy more Bitcoin at the moment.
Effect of Trump’s Proposed Tariffs
Apart from the perceived shortcoming of the US BTC plans, another factor that has weighed down on the crypto market this week is a looming recession occasioned by the economic impact of Donald Trump’s proposed tariffs and the response of other countries to them. Federal Reserve Chair Jerome Powell said last week in a speech that policymakers had adopted a wait-and-see approach to interest cuts until they better understood the President’s moves.
Experts believe that Trump’s proposed tariffs on imports from China, Mexico, and Canada have resulted in volatility in the financial market. However, the US President has defended his move as necessary to enable his country to achieve the desired economic goals. Trump’s stance has caused escalating trade tensions between the US and Canada and triggered fears of a looming recession that extended toward the current crypto market bloodbath, which also caused an altcoin selloff that began Sunday night.
Effect of no Aggressive Accumulation
Experts believe the tariffs could increase inflation, drive up the prices of imported goods, and push investors toward less risky investments than crypto, which is known for its extreme volatility. However, the fears surrounding a looming recession this year have initially added to investors’ concerns. The disappointment of crypto enthusiasts following the US BTC plan has only added to their disappointment. Commenting on the outcome of the signing of the executive order on the US BTC plan, Haider Rafique, a global chief marketing officer at crypto exchange OKX, said:
“While formalizing a Bitcoin reserve is a milestone, it doesn’t create immediate buying pressure, disappointing those expecting aggressive accumulation.”
Conclusion
Many crypto enthusiasts had hoped that the US BTC plan would have included a large purchase of Bitcoin and other cryptocurrencies, helping increase demand and trigger price upwards. However, the announcement that no purchases would be made immediately and that the government would only retain the assets it already has could be responsible for the ongoing crypto market bloodbath.
Frequently Asked Questions (FAQs)
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What is the purpose of an SBR?
The Act states that its purpose is to contribute to the US economy’s economic stability, provide an innovative hedge against monetary instability, and encourage the integration of crypto into the US financial system.
Is a Bitcoin reserve new and unique to the US?
The country has accumulated strategic reserves of commodities in the past, such as gold, silver, grain, fuel, and oil.
What are the key elements of this debate?
There’s ongoing debate as to whether the country should have a reserve of a commodity, namely Bitcoin, for which there is a demonstrated demand, which is recognized by many as a store of value (“digital gold”), and which has the possibility of future increases in value. Opponents point to Bitcoin’s price volatility and lack of intrinsic value of BTC.
Would Bitcoin replace gold as a reserve asset?
At the beginning, no. Replacing the gold reserve with a Bitcoin reserve would not diversify the US’s balance sheet.
Appendix: Glossary of Key Terms
Strategic Bitcoin Reserve: A reserve asset funded by the United States Treasury’s forfeited bitcoin.
Executive Order: A rule or order issued by the President to an executive branch of the government with the force of law.
Recession: A significant, widespread, and prolonged downturn in economic activity.
References
The price predictions and financial analysis presented on this website are for informational purposes only and do not constitute financial, investment, or trading advice. While we strive to provide accurate and up-to-date information, the volatile nature of cryptocurrency markets means that prices can fluctuate significantly and unpredictably.
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