Crypto Strategic Reserve Launched, Is It A Day Trip for Trump Season?

[TL；DR]:

Trump recently sent out a series of tweets in support of the strategic reserve of cryptocurrencies, clearly stating that BTC, ETH, XRP, SOL, ADA, etc. will be included in the reserves, triggering a general rise in cryptocurrencies and strong market attention.

Trump’s call has increased the probability of approval for ETFs such as LTC, DOGE, and SOL. However, many observers believe that this is just a repetition of past remarks and there is no substantial progress.

The impact of this positive news is complex. Although it may drive the advancement of more crypto ETFs, it also brings about problems such as large gaps in CME futures and profit-taking, resulting in a rapid short-term decline.

Introduction

Last weekend, Trump released a series of tweets explicitly promoting the strategic reserve of cryptocurrencies, which led to a strong rebound and correction in the crypto market. It also revealed a new trend of speculation in compliant currencies in the United States. This article will analyze this phenomenon in depth, explore the logic behind it, and look forward to future market trends for readers.

Trump Issued a Series of Posts, and the Market Rebounded Strongly

No one expected that a few tweets released by Trump on Sunday would quickly wipe out the bleak gloom in the crypto market last week. Even more unexpected was that the sharp rise only lasted for one day before cooling down again.

On Sunday, March 2, 2025, Trump tweeted on Truth Social, saying, “After years of suppression by the Biden administration, the U.S. crypto reserves will enhance the status of this critical industry, which is why my digital asset utive order directs the Presidential Task Force to advance a strategic reserve of cryptocurrencies including XRP, SOL, and ADA. I will ensure that the United States becomes the world’s crypto capital. We are making America great again!”

Source: @realDonaldTrump

It then issued another article, emphasizing that “valuable cryptocurrencies” such as BTC and ETH will become core reserve assets.

Source: @realDonaldTrump

Influenced by this good news, the above-mentioned cryptocurrencies rose sharply, driving the overall recovery of the crypto market. In particular, the old and compliant public chain Cardano (ADA) rose by 50%, ranking eighth in the market value sequence of crypto assets.

Source: Gate.io

Trump’s WLFI project also benefited from the increase. Among them, ONDO had the largest increase, with a 24-hour increase of 15%, reaching a maximum of $1.23. In addition, MOVE, TRX, LINK, AAVE, etc., also showed a slight upward trend.

However, as market sentiment fell, the crypto market fell back after a day of big gains. The gains of BTC, ETH, SOL, etc., were all lost on the day of writing. The probability of “Trump establishing a Bitcoin reserve within 100 days of taking office” on the prediction market Polymarket rose from 10% to 22%, and has now fallen back to 16%, reflecting the sharp fluctuations in investors’ confidence in the seriousness of his remarks and policy potential.

Source: Polymarket

The Logic of US Compliant Coins Behind Trump Season

After Trump announced his support for the strategic reserve of cryptocurrencies, various different opinions emerged in the market. On the one hand, many institutions and investors are optimistic about it. As Forbes predicts, the Ethereum ETF may integrate the staking function for the first time, and the spot ETFs of mainstream tokens such as Solana are expected to be launched faster, but more details may be confirmed at the White House Crypto Summit on March 7.

However, some industry insiders have expressed different opinions. Some people questioned whether this was Trump’s “rat trading” operation. Before Trump posted the tweet, some traders used 50 times leverage to buy Bitcoin and Ethereum. After Trump released good news, these 50 times long addresses closed their positions in an orderly manner, which aroused market doubts about the authenticity of this rally.

Source: @CryptoHayes

For example, Arthur Hayes, investment bank TD Cowen, and analysts at Bernstein have expressed caution about the idea of ​​crypto reserves because the U.S. government does not have the budget to increase its holdings of Bitcoin or altcoins.

If we look back at history, we can find there is a complex political and economic logic behind Trump’s attitude towards cryptocurrencies. From Trump’s public criticism of Bitcoin as a scam in 2021 to his gradual change of position since the 2024 campaign, he even promised to keep all Bitcoin held by the federal government and create a “national Bitcoin reserve” if elected. This series of changes reflects Trump’s deepening understanding of the crypto industry, and is also driven by political interests and market factors.

The U.S. Congress’ attitude towards crypto assets has shifted from “strong regulation” to “friendly,” and the hype of U.S. compliant currencies has gradually become clear.

Source: @DtDt666

Many crypto industries hope to enhance the market position and legitimacy of cryptocurrencies by cooperating with the government and relying on the government’s endorsement and policy support. In this process, compliant coins have become the focus of the market. Compliant coins usually refer to cryptocurrencies that are recognized by the government or regulatory agencies and comply with relevant laws and regulations. For example, LINK, SOL, XRP, ONDO, etc., which are superimposed with multiple concepts in the above figure, belong to this category. They are considered to have higher security and stability and are more easily accepted by traditional investors. Trump’s policies have promoted the development of compliant coins, and some institutional investors have begun to turn their attention to these compliant coins, trying to get a share of the emerging crypto market.

After a Short-term Carnival, How Do We View the Long-term Game?

In short, the benefits brought by the strategic crypto reserve plan promoted by Trump are expected to have a multi-faceted impact on the future development of the crypto market.

On the positive side, the Trump administration’s repeated statements on crypto-friendly policies may promote the orderly advancement of crypto ETFs such as LTC, XRP, and ADA, thereby bringing more capital inflows to the crypto market, attracting more institutional investors, and enhancing the degree of integration with traditional financial markets and the stability of currency price fluctuations.

Source: @AltcoinGordon

However, as the short-term surge has come to an end, profit-taking selling pressure, ETF fund outflows and even the uncertainty of Trump’s policy implementation still pose a risk of a correction. From a technical perspective, this weekend’s pull-up action caused a $10,000 gap in CME Bitcoin futures, a record gap that exceeded the previous record of slightly more than $4,000 in August 2024. At the time of writing, this gap was quickly filled.

Since the spot Bitcoin ETF was approved, cryptocurrencies have been deeply integrated with traditional finance. Although Trump’s statement on crypto reserves briefly stopped the downward momentum, underlying macroeconomic problems still exist, which has caused Bitcoin to be dominated by panic market sentiment again after a brief rise.

Source: CME

In general, Trump’s crypto strategic reserve plan is both a shot in the arm for the market and a microcosm of political capitalization. In the short term, policy expectations may promote the approval of ETFs, such as LTC and SOL, attracting traditional funds to enter the market; in the long term, regulatory arbitrage, insider trading and congressional games will still restrict the development of the industry.

For investors, they need to be wary of fanaticism during the Trump Season and grasp the main line of compliance. At the same time, they need to pay close attention to policy progress and reduce the risks brought by FOMO and FUD.