Interpretation of Trump’s Crypto Strategic Reserve Executive Order: The BTC Arms Race Officially Begins

Trump signed an executive order at 8:00 a.m. Beijing time on March 7, 2024 to establish a strategic Bitcoin reserve and digital asset reserve, marking the official inclusion of Bitcoin in the national strategic asset system by the United States. This historic move not only gives Bitcoin national strategic significance, but also triggers widespread discussion on global crypto market volatility and geopolitical competition.

1. Policy Background and Significance

The executive order signed by Trump positions Bitcoin as a national strategic asset, aiming to consolidate the United States' financial dominance in the digital currency era and seize the initiative in global crypto asset rule-making. Against the backdrop of the dollar's dominance facing the challenge of de-dollarization and the national debt exceeding $34 trillion, Bitcoin's scarcity is seen as a modern tool to hedge against inflation and debt crises, similar to "digital gold." This move not only enhances the legitimacy of Bitcoin, but may also push the global regulatory framework toward the United States and attract more institutional investors.

2. Operational Mechanism of Strategic Bitcoin Reserve and Digital Asset Reserve

According to David Sacks, the White House AI and cryptocurrency director, the core mechanism of this policy is as follows:

Strategic Bitcoin Reserve:

• Initial size: Based on approximately 198,000 bitcoins held by the U.S. government (derived from criminal and civil forfeiture proceedings), at current prices ($87,700 per bitcoin), the total value is approximately $17.3 billion.

• How it works: The government is authorized to explore ways to acquire more Bitcoin without increasing the burden on taxpayers, but it explicitly does not actively purchase it. The executive order requires a full audit of holdings and stipulates that Bitcoin cannot be sold as a store of value, thereby reducing potential selling pressure by about $18 billion (estimated by Coinbase head Conor Grogan).

Mechanism features:

• Do not rely on fiscal grants and avoid direct market intervention.

• Emphasize "responsible management" and reduce market selling pressure through long-term holding to strengthen Bitcoin's status as a store of value.

3. Impact of policies on the market and global landscape

Market Impact

• Short-term volatility: In the days before the policy was announced, the market experienced a FOMO effect, and the price of Bitcoin soared to $95,000, but fell back to $84,667 after the details were released this morning, reflecting investors' disappointment with the limited scope of the policy (only confiscation of assets, no large-scale purchases).

• Long-term positive: Matt Hougan, chief investment officer of Bitwise, pointed out that the government's holdings reduce selling pressure and give Bitcoin state endorsement, which is "extremely beneficial" to its long-term value. Local mining (such as Riot Blockchain) and custodians (such as Coinbase) may cooperate deeply with the government to reconstruct the industrial chain.

Global competition landscape

• Geostrategic signal: The US move may stimulate other countries to follow suit, forming a competitive landscape for Bitcoin reserves. For example, China may hold Bitcoin indirectly through Hong Kong, Russia may use it to bypass SWIFT sanctions, and small countries such as El Salvador may use it as a sovereign asset.

• Financial strategy adjustment: Against the backdrop of increasing global economic uncertainty, Bitcoin may become part of a "mixed reserve system" (gold, US dollars, and Bitcoin coexisting).

4. Latest Crypto Asset Price Changes and Market Analysis

As of March 7, 2025, after the release of Trump's executive order, the crypto asset market has experienced significant fluctuations and has shown a downward trend in the short term. The following is the latest data:

Bitcoin (BTC)

Price: Down about 3% in 2 hours to about $87,000 per coin

Reason: The market was disappointed that the government did not purchase Bitcoin on a large scale, and macro pressures (such as the Federal Reserve's hawkish policies) led to capital outflows from high-risk assets.

Ethereum (ETH)

Price: Down 4% in 2 hours to around $2,160.

Other Crypto Assets (Altcoins)

Trend: Some altcoins have fallen by as much as 60% from their 2025 highs. The market is showing "severe differentiation" characteristics. Bitcoin is relatively stable, while altcoins are under obvious pressure.

Prediction: This trend is expected to continue until mid-March or mid-April 2025, when retail investor exits and whale accumulation may trigger a new round of upward momentum.

Market Analysis:

• Policy limitations: Only confiscated assets were used without injecting new funds, and market confidence could not be fully boosted.

• Macroeconomic environment: The Federal Reserve’s tightening monetary policy and Trump’s tariff policy have exacerbated risk aversion.

• Expert opinion: James Butterfill, head of research at CoinShares, believes that the market is disappointed with the policy details; Arthur Hayes, co-founder of BitMEX, warns that if US dollar liquidity tightens in the second quarter of 2025, the market may adjust further.

5. Bitcoin arms race: local competition has begun, and the conditions for a full-scale cold war are still pending

Trump's executive order has pushed the United States to the forefront of global crypto asset competition. Local competition is inevitable, but whether it will evolve into a full-scale "crypto cold war" remains to be seen.

Signs of local competition

• China: May hold Bitcoin indirectly through Hong Kong.

• Russia: Using Bitcoin to Bypass Sanctions and Diversify Reserves.

• Small countries: Follow El Salvador’s lead and include Bitcoin as a sovereign asset.

In the short term, the US's establishment of Bitcoin reserves will force some countries (especially resource exporting countries and financially vulnerable countries) to follow suit, forming a "digital gold" reserve competition. However, a full-scale arms race requires the following three conditions:

• Bitcoin’s technical stability has passed national-level stress tests;

• Major economies reach consensus on minimum regulation;

• The traditional fiat currency system experiences an irreversible collapse of trust (such as hyperinflation of the U.S. dollar).

In the next 5-10 years, a "mixed reserve system" is more likely to emerge: countries will dynamically balance between gold, the US dollar, Bitcoin, and CBDC, and Bitcoin's role is similar to a "crisis hedging option" rather than a mainstream reserve asset. However, if the global order accelerates fragmentation, the cryptocurrency arms race will become the new normal.

summary

The executive order signed by Trump has given Bitcoin national strategic significance through a zero-cost operation mechanism, with clear long-term benefits that may reshape the global financial and competitive landscape. However, in the short term, the market fell due to limited policy details and macroeconomic pressures, with Bitcoin prices falling back to $87,700 and altcoins falling even more. Partial signs of a Bitcoin arms race have emerged, but a full-scale launch requires the cooperation of more countries and market stability support. Investors should pay attention to the potential upward momentum from mid-March to April 2025, while being wary of the complex impact of changes in the global landscape.