What Caused the Collapse of Bitcoin in Donald Trump's Cryptocurrency Plan?
Donald Trump fulfilled his campaign pledge to establish the Federal Reserve, but his approach left everything unchanged, frustrating cryptocurrency enthusiasts and driving down the value of Bitcoin and other cryptocurrencies.
The US President said a few days ago that he would create a Federal Reserve Bank for cryptocurrencies, using XRP, Solana, Cardano, Bitcoin, and others. It’s now official, and the truth is clear: this reserve will use cryptocurrencies confiscated from scammers. That means there will be no cryptocurrency purchases. At least for now.
One cryptocurrency expert called it a “pig in lipstick,” an American way of saying that something that promised a lot has disappointed.
The US President has already signed an executive order to create a cryptocurrency Federal Reserve.
It states that this reserve will be formed from cryptocurrencies that the government already owns, which were created through fraud, hacking, arrested criminals, etc. It is estimated that the state holds 200,000 bitcoins, worth about $17 billion.
The announcement caused a significant drop in the value of Bitcoin. Three days ago it was trading at around €89,000; today it is at €75,000. It has dropped by €5,000 in the last 24 hours.
The first disappointment is that this is an executive order, which means the next administration could rescind it. But the most distasteful thing is that the Fed will not be buying cryptocurrencies to create reserves but will instead use the currencies it already owns. So, in practice, nothing changes.
The most optimistic crypto enthusiasts say that it is indeed important for the country to have an official reserve of Bitcoin. Future purchases are not ruled out, but without specifying dates or quantities.
The Trump administration’s Bitcoin Fed is now official, but it’s not what the crypto market expected. It’s more of a symbolic act than anything else.