US President Donald Trump just signed an executive order setting up a strategic Bitcoin reserve, a historic moment for the world’s oldest and largest crypto. However, the immediate market reaction has been to lower the BTC price. The BTC price last traded around $87,000, down 3% on Friday. The market seemed disappointed by the strategic Bitcoin reserve announcement. Per a tweet from White House crypto and AI czar David Sacks, Bitcoin will initially capitalise the reserve, estimated at around 200,000 coins, already owned by the federal government.
Just a few minutes ago, President Trump signed an Executive Order to establish a Strategic Bitcoin Reserve.
The Reserve will be capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings. This means it…
— David Sacks (@davidsacks47) March 7, 2025
Disappointment Over Bitcoin Reserve Plans
Sacks noted that the Secretaries of Treasury and Commerce have also been authorized to develop budget-neutral strategies for acquiring new Bitcoin. And here may lie the market’s initial disappointment—perhaps some traders had been betting the executive order would come alongside pledges to top up the strategic Bitcoin reserve with more BTC. Various analysts had been hyping up the prospect of the reserve adding new demand to the market this week. These include Bitwise’s CIO, Matt Hougan, who had hyped up the idea that the reserve was “larger than people think.”
“After the dust settles, I suspect the final reserve will be nearly entirely Bitcoin, and it will be larger than people think”
— Matt Hougan, Bitwise pic.twitter.com/lcRlAOGAOD— Swan (@Swan) March 6, 2025
If the market continues to interpret the strategic Bitcoin reserve announcement as underwhelming, the BTC price could “catch up” to this week’s downbeat performance in the US stock market. Stocks have been under pressure this week amid fears about US economic weakness, thanks to DOGE austerity, Trump trade wars and alarming GDP forecasts. The Atlanta Fed’s updated GDPNow model forecasts a 2.4% (annualized) GDP decline in the first quarter of 2025.
On March 6, the #GDPNow model nowcast of real GDP growth in Q1 2025 is -2.4%: https://t.co/T7FoDdgYos. #ATLFedResearch
Download our EconomyNow app or go to our website for the latest GDPNow nowcast: https://t.co/NOSwMl7Jms. pic.twitter.com/O5JIP7TgtS
— Atlanta Fed (@AtlantaFed) March 6, 2025
Short-term technicals also paint a bearish picture for the BTC price. In recent weeks, the crypto has consistently found resistance at its 21DMA, a sign that bears are in control of the market’s near-term momentum. However, BTC has been holding up above its 200DMA and appears to have formed a short-term pennant structure. A bearish breakout of this structure combined with a convincing dive below the 200DMA could confirm the near-term bearish market trend.
Should Investors Buy the BTC Price Dip?
Should the BTC price tumble lower in the short term, this could mark a massive opportunity for investors to secure Bitcoin at a favorable price. Yes, macro uncertainties are high right now. As the US economic picture worsens and the threat of a recession looms, risk appetite could be in for a further beating, which could weigh on Bitcoin.
However, Bitcoin has too many long-term tailwinds going for it for this to mark “the end” of the bull run. The US government’s move to set up a strategic Bitcoin reserve is a massive endorsement of the asset, even more significant than the ETF approvals in early 2024.
Institutions have accumulated BTC at a record rate in the past 12 months. But that is only likely to accelerate in the wake of the creation of the strategic Bitcoin reserve. Meanwhile, the move will also turn heads around the world, sparking the beginning of a race amongst nation states to accumulate BTC.
When the leader (the USA) moves, the crowd (the rest of the world) will follow. 2025 is set to be a record year for Bitcoin’s overall adoption, and if a US recession is around the corner, a liquidity surge could also be on the horizon. US economic weakness would presumably be accompanied by Fed rate cuts and possibly even QE and other forms of liquidity injection.
And just like that, the market is now pricing in three full Fed Fund rate cuts by the end of the year. pic.twitter.com/6OswuTCfs6
— James Lavish (@jameslavish) March 4, 2025
This has historically been a significant positive for the BTC price. However, risks are strongly skewed to Bitcoin’s upside in the coming years.
