US President Donald Trump just signed an executive order setting up a strategic Bitcoin reserve, a historic moment for the world’s oldest and largest crypto, though the immediate market reaction has been to send the BTC price tumbling lower.
The BTC price was last trading around $87,000, down 3% so far on Friday, with the market seemingly disappointed by the strategic Bitcoin reserve announcement.
Per a tweet from White House crypto and AI czar David Sacks, the reserve will initially be capitalized by Bitcoin already owned by the federal government, estimated at around 200,000 coins.
Sacks noted the Secretaries of Treasury and Commerce have also been authorized to develop budget-neutral strategies for acquiring new Bitcoin.
And here may lie the market’s initial disappointment – perhaps some traders had been betting the executive order would come alongside pledges to top up the strategic Bitcoin reserve with more BTC.
Various analysts had been hyping up the prospect of the reserve adding new demand to the market this week.
These include the CIO of Bitwise Matt Hougan, who had hyped up the idea of the reserve being “larger than people think”.
If the market continues to interpret the strategic Bitcoin reserve announcement as underwhelming, that could open the door for the BTC price to “catch up” to this week’s downbeat performance in the US stock market.
Stocks have been under pressure this week amid fears about US economic weakness, thanks to DOGE austerity, Trump trade wars and alarming GDP forecasts.
The Atlanta Fed’s updated GDPNow model is current forecasting a 2.4% (annualized) decline in GDP in the first quarter of 2025.
Short-term technicals also paint a bearish picture for the BTC price. The crypto has consistently found resistance at its 21DMA in recent weeks, a sign that bears are in control of the market’s near-term momentum.
However, BTC has been holding up so far above its 200DMA, and appears to have formed a short-term pennant structure.
A bearish breakout of this structure combined with a convincing dive below the 200DMA could confirm the near-term bearish market trend.
Should Investors Buy the BTC Price Dip?
Should the BTC price tumble lower in the short term, this could mark a massive opportunity for investors to secure Bitcoin at a favorable price.
Yes, macro uncertainties are high right now. As the US economic picture worsens and the threat of a recession looms larger, risk appetite could be in for a further beating, and this could weigh on Bitcoin.
However, Bitcoin has too many long-term tailwinds going for it for this to mark “the end” of the bull run.
The US government’s move to set up strategic Bitcoin reserve is a massive stamp of approval on the asset, even bigger than the ETF approvals in early 2024.
Institutions had already been accumulating BTC at a record rate in the past 12 months. But that is only likely to accelerate in wake of the strategic Bitcoin reserve’s creation.
Meanwhile, the move will also turn heads around the world, sparking the beginning of a race amongst nation states to accumulate BTC.
When the leader (the USA) moves, the crowd (rest of the world) will follow.
2025 is set to be a record year for overall adoption for Bitcoin, and if a US recession is around the corner, a liquidity surge could also be on the horizon.
US economic weakness would presumably be accompanied by Fed rates cuts and possibly even QE and other forms of liquidity injection.
This has, historically, been a major positive for the BTC price. Risks are strongly skewed to the upside for Bitcoin in the coming years.
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