Bitcoinfell on Friday despite US President DonaldTrumpsigning an executive order to establish aStrategic Bitcoin Reserve. The move, which was initially expected to boost market sentiment, instead disappointed investors as it became clear that the government would not be buying fresh Bitcoin but would rely solely on confiscated assets.

No new Bitcoin purchases

The Strategic Bitcoin Reserve will be funded only through BTC seized in criminal and civil asset forfeiture cases, rather than through government purchases. “The reserve will be capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings,” the White House Executive Order stated.

Investors had anticipated that the US government might directly acquire Bitcoin, potentially boosting demand and price. Instead, the executive order clarified that no taxpayer money will be used for crypto acquisitions, dampening bullish sentiment.

“BTC reacted to Trump’s executive order to create a strategic Bitcoin reserve funded solely from the assets seized by the government, raising concerns that the government wouldn’t be a buyer of crypto,” said Edul Patel, CEO and co-founder of Mudrex.

Bitcoin drops below $88K

As of 10:39 AM IST, Bitcoin was down 4.7% at $87,622 after touching a low of $84,717. Ethereum declined 6% to $2,156, while the globalcrypto marketcap dropped 4.1% to $2.88 trillion. Altcoins also suffered, with Solana falling 5%, XRP down 1.5%, Cardano dropping 10%, and Dogecoin losing 7%.

“The market reaction to this news was a bit negative as people were expecting the US to deploy fresh capital into Bitcoin. But for now, even though the White House is calling it digital gold, they will not buy fresh BTC,” said CoinSwitch Market Desk.

Future Bitcoin purchases possible, but with constraints

While the executive order does not authorize immediate Bitcoin purchases, it leaves the door open for future acquisitions. The Treasury and Commerce Departments have been tasked with developing strategies for acquiring more BTC—provided these strategies are budget-neutral and do not impose costs on taxpayers. However, any additional purchases beyond seized assets would require further executive or legislative action.

Government Bitcoin holdings won’t be sold

A key provision in the order states that BTC deposited in the Strategic Bitcoin Reserve “shall not be sold” and will be maintained as reserve assets of the United States. This means the US government is effectively taking a portion of Bitcoin’s supply out of circulation, potentially impacting long-term supply dynamics.

Despite this, traders seemed more focused on the lack of new demand rather than the reduced supply, contributing to the sell-off.

Also Read: Bitcoin is a bubble and will blow up someday, says Jim Rogers

U.S. digital asset stockpile for other cryptos

The order also establishes a separate United States Digital Asset Stockpile to hold other confiscated cryptocurrencies. Unlike Bitcoin, these non-BTC assets may be managed differently, with the Treasury required to determine strategies for their responsible stewardship.

Legal and investment review may shape future policy

Within 60 days, the Treasury Department must submit a report evaluating the legal and investment implications of the Strategic Bitcoin Reserve and Digital Asset Stockpile. This review could lead to further policy changes, potentially shaping how the U.S. government handles Bitcoin and other digital assets going forward.

Also Read: Peter Schiff calls Trump’s crypto reserve push a ‘Pump and Dump’, demands congressional probe

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)