The introduction of the U.S. Crypto Strategic Reserve has captured global attention. We analyze its significance and market reaction.
Policy Essence: Boundaries of Reserves
Trump's signing of the executive order on the cryptocurrency strategic reserve indicates a significant shift in the U.S. approach to digital assets. The primary assets of the Bitcoin reserve comprise about 200,000 BTC acquired through forfeitures. Other assets like XRP, ADA, ETH, and SOL are to be acquired through donations or confiscations, reflecting a cost-free reserve strategy where the government does not allocate budget funds for accumulation.
Market Expectation Misalignment
The announcement of the strategic reserve led to a temporary rise in cryptocurrency prices, but a subsequent decline showed market expectations were unmet. Key issues remain unaddressed, with the final implementation dependent on subsequent legislative actions, adding uncertainty.
Market Response Analysis: Expectation and Liquidity
Support from the Fed and the Treasury was more reserved than expected, emphasizing the need for careful assessment of crypto assets as part of the financial system. Many analysts believe that the reserve program might provide a more stable foundation for long-term growth, reducing uncertainties and attracting institutional investors. However, in the short term, the market faces challenges due to the lack of clear regulation.
Despite short-term market fluctuations, the long-term prospects of the U.S. crypto reserve initiative may contribute to stable growth and strengthen crypto asset regulations on the international stage.
