Investing.com-- Bitcoin fell sharply in early Friday trading after U.S. President Donald Trump’s unveiling of a strategic reserve for the crypto sparked little cheer, given that it entailed no government-funded purchases of digital assets.
But the world’s biggest cryptocurrency pared a bulk of its initial losses, as analysts argued that the reserve still represented a positive development for crypto markets.
Broader crypto prices also sank, with Solana, Ether, Cardano, and XRP- which will be part of a digital asset reserve proposed by Trump- seeing few gains.
Bitcoin was down 1.3% at $89,756.0 by 10:31 ET (15:31 GMT). The world’s biggest cryptocurrency had fallen as low as $84,000 shortly after Trump’s crypto czar, David Sacks, announced plans for the reserve.
Trump signs executive order for Bitcoin reserve
Sacks said in a social media post that Trump had on Thursday evening signed an executive order to form a Bitcoin strategic reserve.
The reserve will be formed solely from Bitcoin seized by the federal government in criminal or civil actions, and will not entail any crypto purchases by the government. But the government will also not sell any more of its crypto holdings, and keep the Bitcoin reserve as a store of value.
The government holds about 200,000 Bitcoins seized over the past 15 years, with Trump’s order also calling for an audit of the government’s crypto holdings. The Department of Justice- which holds all the government’s seized Bitcoin- was seen selling the token intermittently on the open market in recent years.
Sacks added that Trump had authorized his commerce and Treasury secretaries to explore “budget-neutral” purchases of Bitcoin, although it was not immediately clear what this implied.
Still, Trump’s Bitcoin reserve was met with limited enthusiasm from crypto markets. While traders welcomed the increased recognition of crypto by the U.S. government, the lack of any new coin purchases meant that the formation of the reserve would have little actual market impact.
"Many had expected Trump to take a more aggressive pro-Bitcoin stance, potentially acquiring BTC directly, but instead, this policy shift has fueled uncertainty," Andri Fauzan Adziima, a research lead at crypto exchange Bitrue, told Investing.com.
"Until clearer details emerge on how the government plans to manage these holdings, market sentiment is likely to remain cautious," he added.
Focus is now on Trump’s White House crypto summit, which is set to take place later on Friday.
Trump crypto reserve positive for crypto- TD Cowen
TD Cowen analysts said that while Trump’s Bitcoin order was not the aggressive Bitcoin reserve some were clamoring for, it still represented a positive in the White House signaling support for digital assets.
“We view this as a compromise. The government is not spending taxpayer dollars to acquire new digital assets. It is simply not selling the ones that it seizes,” TD analysts wrote in a note.
They noted that at most, the Bitcoin reserve will cut off a source of revenue for the government from its Bitcoin sales. Democrat lawmakers could also oppose the order on the grounds that it forces taxpayers to speculate in crypto, although this appeared unlikely to derail plans for the reserve.
But TD analysts were also doubtful over any government purchases of Bitcoin.
U.S. job growth accelerated in February
On the macroeconomic front, U.S. job growth picked up in February, with employers adding 151,000 jobs, according to data from the Bureau of Labor Statistics released Friday.
Despite the rebound, the unemployment rate inched up to 4.1% from 4% the previous month, while labor force participation declined slightly.
February’s gains marked an improvement from January, when severe weather and wildfires likely held back hiring. January’s job growth was also revised down to 125,000 from an initial estimate of 143,000.
Crypto price today: altcoins fall as digital asset reserve sparks little joy
Broader crypto prices tracked declines in Bitcoin, as Trump’s order for a digital asset stockpile of altcoins also sparked little joy. Trump’s order said the stockpile will also be created from seized cryptos, and will not involve any new purchases of the listed cryptos.
World no.2 crypto Ether fell around 2.5% to $2,199.10, while XRP slid 3.7% to $2.5122.
Cardano tanked 6.4% while Solana fell 1.7%.
Among meme tokens, Dogecoin nearly 1%, while $TRUMP shed 3.4%.
Ambar Warrick contributed to this report.