Crypt market experts said the short-term investor disappointment paired with ongoing macroeconomic concerns related to import tariffs.. Photos by File photo
Cryptocurrency prices continued to plummet on Monday as volatility persisted after an executive order signed by President Donald Trump to create a US strategic bitcoin reserve — a move long-championed by industry advocates — disappointed investors.
Contrary to expectations of a bullish rally, Bitcoin and other cryptocurrencies tanked within minutes, dragging down the broader digital asset market. The abrupt sell-off, analysts say, underscores investor disillusionment with the government’s plan to populate its reserve using seized crypto holdings rather than new purchases, dashing hopes for a surge in institutional demand.
On Monday, bitcoin was trading at $81,712, down over 5.0 per cent but off earlier lows, according to Coin Metrics. Other cryptocurrencies also dropped on Monday. Both ether and XRP were down about 7.5 per cent at around 9:43 a.m. Singapore time. The sell-off wiped billions from the crypto market’s total capitalisation, catching traders off guard. Many had anticipated the reserve announcement — touted as a milestone for mainstream crypto adoption — to ignite a sustained price rally. Instead, the details of its implementation triggered panic.
Crypt market experts said the short-term investor disappointment paired with ongoing macroeconomic concerns related to import tariffs may push bitcoin to close below $82,000, risking more downside volatility. They said the crux of the market’s frustration lies in how the US government plans to stockpile cryptocurrencies. The reserve will be funded by coins that have been seized in criminal and civil forfeiture cases and there are no plans for the US government to buy more bitcoin.
David Sacks, the Trump administration’s AI and crypto czar, clarified that the reserve would rely exclusively on Bitcoin and other digital assets seized from criminal enterprises over the years, rather than new Treasury purchases. This revelation deflated speculation that federal buying would inject fresh demand into the market.
“The executive order didn’t spark a rally because the market expected new government purchases,” Rachel Lin, CEO of decentralised exchange SynFutures, said. “Instead, it’s using existing seized Bitcoin. Investors felt let down.” Since January, when Trump first ordered agencies to explore a crypto reserve, industry leaders had framed the initiative as a potential catalyst for higher valuations. The logic was simple: large-scale government acquisitions would reduce circulating supply and validate crypto as a strategic asset.
Some investors, however, said the move to establish a reserve was bullish in the long-term.
“I absolutely think the market has this wrong,” Matt Hougan, chief investment officer at Bitwise Asset Management, told CNBC’s “Squawk Box Asia” on Monday. “The market is short-term disappointed” that the government didn’t say it was immediately going to start acquiring 100,000 or 200,000 bitcoin, he added.
Hougan pointed towards comments on X from White House Crypto and AI Czar David Sacks, who said the US would look for “budget-neutral strategies for acquiring additional bitcoin, provided that those strategies have no incremental costs on American taxpayers.”
Analysts said the use of seized funds — already held in US custody — eliminates the demand driver. The government’s Bitcoin stockpile, estimated at over 200,000 BTC (worth roughly $17 billion), stems from high-profile seizures like the Silk Road bust and Colonial Pipeline ransom recovery. By repurposing these dormant holdings, the reserve avoids market disruption but forfeits the bullish momentum many had priced in.
Last week’s steep plunge reflects a classic “buy the rumour, sell the news” scenario. Crypto markets had climbed steadily in recent months as Trump’s pro-crypto rhetoric intensified, with his January executive order fuelling bets on aggressive federal buying.
“Traders were positioned for a demand shock, but the policy as structured doesn’t change the supply-demand equation,” said Marcus Thielen, head of research at CryptoQuant. “The government isn’t soaking up coins; it’s reshuffling ones it already owns.”
Critics also highlight unresolved questions. While the reserve’s creation signals regulatory acceptance, its operational framework remains vague. Will the US actively trade its crypto holdings? Could it sell portions to stabilise markets during volatility? Such uncertainties may have spooked investors fearing sudden liquidations.
