Is it time to buy crypto? Trump’s plan has markets going wild

Cryptocurrencies experienced a notable rally on Sunday following President Donald Trump’s announcement regarding the establishment of a strategic crypto reserve for the United States. This reserve will encompass Bitcoin, Ether, XRP, Solana’s SOL token, and Cardano’s ADA.

In a post on Truth Social, Trump stated, “A U.S. Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration, which is why my Executive Order on Digital Assets directed the Presidential Working Group to move forward on a Crypto Strategic Reserve that includes XRP, SOL, and ADA. I will make sure the U.S. is the Crypto Capital of the World.” In a subsequent post, he emphasized, “And, obviously, BTC and ETH, as other valuable Cryptocurrencies, will be at the heart of the Reserve.”

Following the announcement, XRP surged 33%, while Solana’s token increased by 25%, and Cardano’s cryptocurrency rose more than 60%. Bitcoin climbed 10% to $94,343.82, recovering from a three-month low below $80,000 recorded on Friday. Ether also gained 13% amidst a challenging year for the cryptocurrency.

Trump is set to host the first White House Crypto Summit on Friday, attracting investor attention for further insights on the reserve’s future. This announcement marks the first time Trump has distinguished between a crypto “reserve,” which implies ongoing purchases, and a “stockpile,” which would simply preserve the existing crypto holdings of the U.S. government.

The concept of a Bitcoin stockpile was initially introduced by Trump last summer during the Bitcoin 2024 conference, where he aimed to garner support from the crypto community. During this event, Wyoming Senator Cynthia Lummis proposed the establishment of a national strategic bitcoin reserve.

Interest in the strategic Bitcoin reserve intensified after Trump’s re-election in November, pushing Bitcoin prices to new highs. However, momentum faded following a January executive order instructing the President’s Working Group on crypto to assess the establishment of a digital asset stockpile. The response from the crypto industry was mixed, particularly due to the order’s emphasis on stockpiling as opposed to building a reserve.

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Critics within the crypto community argue that a reserve should consist solely of Bitcoin due to its established and decentralized nature. There is concern that including additional cryptocurrencies could lead to government favoritism in the market. Others contest the very idea of a U.S. crypto reserve, fearing it could diminish the dollar’s status and be susceptible to liquidation by future administrations.

Before the announcement, Bitcoin had been in a consolidation phase and recently concluded its worst month since 2022. Trump’s executive order had suggested creating a stockpile of digital assets but did not provide specific names until this announcement.

The recent cryptocurrency price movements indicate increased investor confidence. Bitcoin rose nearly 9% post-announcement, breaking the $93,000 threshold, and Ethereum climbed 11% to $2,500, with XRP increasing to $2.80. Cardano stood out with a nearly 60% rise, surpassing the $1 mark.

Potential implications of a national crypto reserve could foster broader acceptance of cryptocurrencies in payment systems and investment portfolios. However, while government support may enhance legitimacy, it could also introduce stricter regulations that affect trading and taxation within the cryptocurrency space.

It remains uncertain how the new reserve will be structured and operationalized. Analysts and legal experts differ in their views on whether Congressional approval will be required to create the reserve. Some suggest it could be established through the U.S. Treasury’s Exchange Stabilization Fund, which allows for the purchase or sale of foreign currencies.

Featured image credit: Kerem Gülen/Ideogram