Trump Delivers: Order Signed for Strategic Bitcoin Reserve
Cryptocurrency Policy Meeting at the White House. Breakout or Breakdown?
During the Presidential race, Donald Trump mentioned several times he plans to set up a Strategic Bitcoin Reserve and on Thursday he delivered on his promise. But crypto is a polarizing subject and the Bitcoin Reserve is not free of controversy.
While some applauded the decision, others called it just a rebranding of an already existing Bitcoin stockpile. The U.S. Government already holds about 198,000 Bitcoins, worth roughly $17 billion. These coins were seized through law enforcement actions, in other words, the Government already had these coins so all that’s changed is the name of the stockpile.
Additionally, White House crypto head David Sacks mentioned that no taxpayer money will be spent on additional purchases of Bitcoin but future seized assets will be included in the Reserve. This makes the Reserve look like a simple rebranding because it lacks a clear purchase plan.
On the other hand, the Reserve effectively takes $17 billion out of the market and alleviates selling pressure because the Reserve coins will not be sold. There is a possibility of acquiring new Bitcoins but this will be done in a budget-neutral way. The exact procedure is not stipulated anywhere so at the time all we know is that the Reserve will grow by adding future seized assets.
Others to follow?
Even if a clear accumulation plan is not laid out at the moment, the fact that the U.S. created the Strategic Bitcoin Reserve, legitimizes crypto in general and Bitcoin in special. This may cause other countries to take similar actions, which means they will have to buy Bitcoin unless they already hold it. If more countries go down this road, it means that more Bitcoin will be “HODL-ed” and not sold, in a way bringing down the total supply of 21 million BTC.
Later today, President Trump will participate in a roundtable discussion at the White House regarding cryptocurrency policy. The meeting will start at 6:30 pm GMT and will likely create volatility, especially on Bitcoin.
Chart Analysis – BTC/USD
Bitcoin had an interesting period lately, with massive swings and quick reversals. Just last week it reached a low of $78,200, only to climb as high as $95,150 two days later. Earlier this week it dropped to $81,500 and at the time of writing it is changing hands at $88,700.
These wild swings created a few candles with very small bodies and long wicks, which show rejection and bullish pressure. For Bitcoin to recover we need to see a daily close above the resistance at $90,700. If this is followed by a break of the bearish trend line drawn from the ATH, then the pair is likely to make a stronger rally.
