Bitcoin experienced a dip on Monday as volatility continues to grip the price of the world’s largest cryptocurrency, following an executive order signed by President Donald Trump to establish a strategic bitcoin reserve for the United States.
Earlier in the day, bitcoin prices fell by as much as 6.5%, reaching around $80,650 before recovering much of its losses. By 4:12 a.m., the cryptocurrency was down 0.74%, trading at $82,050, according to Coin Metrics.
The new reserve will be funded by coins seized in criminal and civil forfeiture cases, with no plans for the U.S. government to purchase additional bitcoin. Following last Thursday’s announcement of the reserve, crypto prices took a hit as some investors were disappointed by the lack of a more aggressive acquisition strategy.
Other cryptocurrencies also showed signs of volatility. Both ether and XRP initially dropped by around 7.5% before recovering and trading in the green by 4:12 a.m.
However, some investors believe that the establishment of a bitcoin reserve could be a bullish development in the long run. “I absolutely think the market has this wrong,” Matt Hougan, chief investment officer at Bitwise Asset Management, told CNBC’s Squawk Box Asia on Monday. “The market is short-term disappointed” because the government didn’t announce immediate large-scale bitcoin acquisitions, he added.
Hougan pointed to remarks from White House Crypto and AI Czar David Sacks, who suggested that the U.S. would pursue “budget-neutral strategies for acquiring additional bitcoin, provided that those strategies have no incremental costs on American taxpayers.”
Hougan emphasized the broader implications of the executive order, saying, “Did this executive order make it more likely that in the future, bitcoin will be a geopolitically important currency or asset? Will other governments look to follow the U.S.’s lead and build their own strategic reserve?” He confidently answered, “Yes,” adding, “That’s the question that determines if bitcoin is $80,000 a coin or $1 million a coin.”
Describing the current market pullback as a “short-term setback,” Hougan remains optimistic, stating, “I think the market will soon find its footing and realize that actually, this is incredibly bullish long-term for this asset and for crypto as a whole.”
