Cryptocurrency market drops 12%: Trump's crypto-reserve plan loses credibility

Cryptocurrency market drops 12%: Trump's crypto-reserve plan loses credibility

The cryptocurrency market saw a dramatic drop on Tuesday, erasing earlier gains associated with President Donald Trump's ambitious proposal to create a US strategic crypto-reserve. This rapid reversal of optimism proved to be an opportunity for investors to take profits, leading to a 12.3% drop in the total market value of cryptocurrencies to $2.85 trillion.

The most well-known cryptocurrencies suffered significant losses: bitcoin fell 9.8% to $83,694, Ether plunged 14.8% to $2,083, and XRP saw a 17.7% drop to $2.30. Altcoins such as Solana and Cardano faced even more drastic losses, each falling more than 20%.

This sell-off led to the liquidation of $1.08 billion worth of trading positions, affecting more than 311,000 traders, according to data from CoinGlass. Losses on individual cryptocurrencies were also significant: bitcoin had liquidations of $398.49 million, Ethereum had liquidations of $209.73 million, and altcoins Solana, XRP and Cardano lost $70.49 million, $62.89 million and $44.15 million, respectively.

Experts' opinions on Trump's plan are beginning to diverge. Many are expressing concern that the move is risky and potentially misguided. Anthony Pompliano, founder of Professional Capital Management, expressed skepticism about the initiative and warned that it could enrich insiders at the expense of taxpayers. Gemini's co-founders, Cameron and Tyler Winklevoss, then stressed that only Bitcoin meets the criteria for a legitimate reserve asset.

"I have nothing against XRP, SOL or ADA, but I don't think they are suitable for a strategic reserve. Only Bitcoin meets that bar at the moment," the Winklevoss said.

Peter Schiff, a longtime critic of bitcoin, went even further, calling Trump's announcement "the biggest crypto move of all time." He called on Congress to investigate possible market manipulation associated with Trump's announcement and called for greater transparency about internal communications.

In addition to political and investment factors, seasonality also plays a role in the market. Historically, February has been a strong month for Bitcoin with an average gain of 13.12%. This year, however, the market experienced the largest February post-halving decline in history, suggesting that Bitcoin and the broader cryptocurrency market will need a strong buying push to regain bullish momentum.

In the coming weeks, it will be crucial to see how the market deals with these challenges and whether renewed institutional interest and macroeconomic factors, such as the performance of the S&P 500 index, will play an important role in the future development of cryptocurrencies.

*This is not an investment recommendation.

Coingarage team