Why Is Bitcoin Price Dropping Despite US Strategic Reserve?

Bhushan Akolkar
March 7, 2025
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Highlights

  • President Trump's executive order establishing a U.S. strategic Bitcoin reserve triggered a significant market sell-off.
  • Altcoins like Ethereum, Solana, and Cardano also suffered declines between 5-10%, reflecting widespread dissatisfaction.
  • The executive order grants the Treasury and Commerce Secretaries authority to devise a budget-neutral strategy for acquiring Bitcoin.
  • Proposed methods include utilizing the $39 billion Exchange Stabilization Fund or implementing Senator Lummis’s Bitcoin Act.
  • The Bitcoin Act wants the U.S. Treasury to accumulate 1,000,000 Bitcoin over five years.

President Donald Trump signing the executive order for US strategic reserve for Bitcoin has turned out to be a ‘sell the news’ event. Bitcoin price crashed down all the way from $92,000 to hitting a low under $85,000, dropping more than 7% in the last 24 hours. Altcoins have also come crashing down 5-7% as the broader crypto community doesn’t seem to be much happy regarding the reserve news.

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Why Is Bitcoin Price Crashing Suddenly?

After hitting the bottom of $83,000 earlier this week, Bitcoin bounced back all the way to $92,000 ahead of the scheduled White House Crypto Summit on Friday, March 7. Bitcoin prices drop significantly after President Trump signs an executive order to establish a strategic Bitcoin reserve.

The order provides no clarity on how the reserve will be funded beyond the Bitcoin already held by the U.S. government. Essentially, it’s merely a commitment to retain current holdings without concrete plans for further accumulation or funding strategies.

The crypto community is discussing whether the Trump government could open up channels to build its Bitcoin stockpile. On the other hand, the crypto market thinks that the government should add no more altcoins like ETH, SOL, XRP, and ADA and instead continue with the current holdings seized from previous operations. Speaking on the development, economist Peter Schiff stated:

“While it’s up for debate whether the government can buy more Bitcoin for the strategic reserve, the one thing the executive order makes clear is that the crypto stockpile will consist only of seized tokens, so no ETH, XRP, ADA, or SOL will be bought. So at least there’s that!”

Apart from Bitcoin price drop today, all the altcoins part of US strategic reserves have seen a greater fall. Ethereum (ETH) dropped by 5.83%, Solana (SOL) is down by 4,76%, Cardano (ADA) is down by 10.83%, while XRP is holding relatively well with just 1.34% drop.

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Strategic Bitcoin Reserve Execution Path Ahead

Metaplanet CEO Simon Gerovich stated that although Bitcoin price is falling, the market is undermining the importance of Trump’s executive order for BTC reserves. According to Gerovich, the order grants the Secretaries of Treasury and Commerce authority to devise a strategy for acquiring additional Bitcoin in a budget-neutral manner, ensuring no added costs for American taxpayers. He added:

“The Executive Order is more aggressive than expected. This provision paves the way for substantial Bitcoin accumulation without burdening the national budget.”

Gerovich also outlined two possible paths for the execution of a strategic Bitcoin reserve. These include:

  • Exercise of Presidential Power: Utilizing the Exchange Stabilization Fund’s net assets, currently around $39 billion, to purchase Bitcoin immediately.
  • Congressional Approval: Under Senator Lummis’s proposed Bitcoin Bill, the government would acquire 200,000 BTC annually for five years by leveraging the revaluation of gold, all in a budget-neutral framework.

Explaining this further, Fox Business journalist Eleanor Terret said: “So Donald Trump’s Executive Order calls for two separate things — a US strategic reserve and a stockpile. The key difference between the reserve and the stockpile is that the government will not actively look for ways to purchase more of the assets contained in the stockpile. It will only explore using government funds (if they can find budget neutral ways to do that) on buying BTC”. Crypto Czar David Sacks revealed that Scott Bessent and Howard Lutnick are appointed to tap into potential resources for more accumulation in the wake of reserve purposes.

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Cynthia Lummis Pushes for Bitcoin Act Approval

Commenting on the development, Senator Cynthia Lummis stated that this is just the beginning. “President Trump deserves all the credit. Now let’s pass the BITCOIN Act and make it law,” she wrote.

Renowned crypto legal expert MetaLawman has drawn attention to Senator Cynthia Lummis’s BITCOIN Act, which includes a proposal for the U.S. Treasury to acquire 1,000,000 Bitcoin over five years.

Referencing Section 5(a)(1)(A) of the Act, MetaLawman noted, “The BITCOIN Act calls for the Treasury to ‘purchase’ 1,000,000 Bitcoin within a five-year period.”

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets. 

He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.