The boot drops, Trump officially signs executive order to establish BTC strategic reserve, why is the market falling?

Authored by: Luke, Mars Finance

Just now, David Sacks announced on the X platform that US President Trump has signed an executive order officially establishing the US strategic Bitcoin reserve. This news quickly attracted attention, not only because of its policy significance, but also because the market reacted unexpectedly after the news was announced—Bitcoin prices plummeted, with a drop of over 5% in just ten minutes. This scene seems contradictory: why didn’t such a significant bullish policy push the market up, but instead triggered selling?

What happened?

According to David Sacks’s post, the core content of this executive order can be summarized in several key points. First, the U.S. government will use Bitcoin obtained through criminal or civil asset forfeiture procedures to establish a strategic reserve, meaning that the entire plan does not require the use of taxpayer funds. It is estimated that the U.S. government currently holds about 200,000 bitcoins, but has never undergone a comprehensive audit before. Therefore, the executive order requires a thorough inventory of the government’s holdings of digital assets to ensure transparency.

Second, bitcoin in reserve will be seen as a store of value, similar to “digital gold”, which will not be easily sold. The decision is aimed at correcting past losses from the premature sale of bitcoin – which has allegedly cost taxpayers more than $17 billion in potential value losses. The Ministry of Finance and Commerce are also mandated to develop a plan that does not increase the burden on taxpayers in order to further acquire more bitcoin. In addition, the E.O. establishes a U.S. digital asset repository to manage other digital assets acquired by the government through the forfeiture process in addition to Bitcoin, but will not actively purchase additional assets.

Trump has made good on his campaign promise to make the United States the “crypto capital of the world.” In particular, David Sacks highlighted the key role of Secretary of the Treasury Scott Bessent, Secretary of Commerce Howard Lutnick, and Working Group Executive Director Bo Hines in making this policy a reality. The executive order is seen as an important sign of the Trump administration’s support for the digital asset industry and its embrace of cutting-edge technology.

Why is the market falling?

In theory, this executive order can be regarded as a significant positive for Bitcoin. Not only does it confirm the U.S. government’s recognition of Bitcoin as a strategic asset, but it also eliminates market concerns about government selling pressure by prohibiting the sale of existing reserves. More importantly, this gives Bitcoin a similar national reserve status as gold, undoubtedly enhancing its legitimacy and value support in the long run. However, the market reaction is completely opposite, with the price of Bitcoin falling rapidly by over 5% after the news was announced. Why is this?

A reasonable explanation is that there is a gap between the market’s previous expectations and the actual policy. Before the executive order was signed, the cryptocurrency community and investors widely speculated that the Trump administration might take more aggressive measures, such as using fiscal funds to directly purchase Bitcoin, to significantly increase the reserve size. This expectation is not unfounded, after all, Trump has expressed strong support for cryptocurrencies multiple times during the campaign, and the concept of “strategic reserve” also easily leads people to think that the government will make a big investment. However, the executive order clearly stipulates that the source of reserve funds is limited to confiscated income, and any additional plans to acquire Bitcoin must be “budget neutral,” which means the government will not directly invest new funds to purchase Bitcoin.

For many investors, this is undoubtedly a typical case of “good news cashing out is bad news”. The market may have already factored in the expectation of “government large-scale coin purchase” in the past, but when the actual policy is implemented, although the direction is positive, it does not reach the most optimistic imagination. As a result, some investors choose to take profits or stop loss, leading to a rapid price retracement.

Deeper thinking

From a logical point of view, there may be other potential factors for the market downturn. First, the price of Bitcoin has accumulated a significant increase in the past period, and any significant news could be a trigger for short-term adjustments. Second, the current global economic environment is complex and changeable, investors may be more cautious about risk assets, and even positive news may not completely reverse market sentiment. In addition, the specific details of the executive order have not been clarified, such as audit results, future plans to acquire Bitcoin, etc., these uncertainties may lead some investors to choose to wait and see rather than immediately increase their positions.

Conclusion

Trump signing an executive order to establish a strategic reserve of Bitcoin is a milestone in the U.S. digital asset policy. It not only fulfills campaign promises but also provides policy endorsement for the long-term value of Bitcoin. However, the short-term market decline reminds us that the subtle differences between investors’ expectations and actual policies can often cause ripples in the rapidly changing crypto market. For Bitcoin, this may just be a new starting point. In the future, as audits are completed and policy details are implemented, whether its position as “digital gold” can truly be solidified remains to be seen.