Author: Weilin, PANews

At 8 AM Beijing time on March 7, David Sacks, the White House Director of AI and Crypto Policy, announced on the X platform that U.S. President Trump has officially signed an executive order to establish a strategic Bitcoin reserve and digital asset reserve. However, since both reserves primarily rely on "criminal or civil asset forfeiture proceeds" for funding support, the market reacted negatively in the short term, with Bitcoin's price briefly falling below $85,000, down 4.21% in 24 hours, before a slight recovery.

It is reported that the presidential executive order is not law and has certain limitations in its scope. Some analysts point out that there may still be favorable developments in Congress regarding the "Bitcoin Strategic Reserve." Meanwhile, industry insiders believe that the impact of the Trump market on the overall market will gradually weaken, and the crypto industry will enter a new phase, with attention shifting back to the application layer.

Bitcoin Strategic Reserve: Based on Forfeited Assets, Will Implement Audit and Budget Neutral Strategies

David Sacks stated in the announcement: "This reserve will be funded by Bitcoin held by the federal government, which has been obtained through criminal or civil asset forfeiture processes. This means that taxpayers will not bear any costs."

He pointed out that the U.S. government is estimated to hold about 200,000 Bitcoins, but a complete audit has never been conducted before. This executive order requires a comprehensive review of the federal government's digital asset holdings. The U.S. will not sell the Bitcoins deposited in this reserve but will use them as a means of value storage. This reserve is similar to a "digital gold" version of Fort Knox in the cryptocurrency field.

Additionally, Sacks mentioned that the premature sale of Bitcoin has resulted in a loss of over $17 billion in value for U.S. taxpayers. Now, the federal government will formulate strategies to maximize the value of its held assets. The Secretary of the Treasury and the Secretary of Commerce are authorized to develop budget-neutral strategies to acquire more Bitcoin, provided that these strategies do not impose additional costs on U.S. taxpayers.

The executive order also establishes a U.S. digital asset reserve, which includes digital assets other than Bitcoin that have been forfeited in criminal or civil proceedings. The government will not acquire additional assets for the reserve; its sources are limited to proceeds from forfeiture processes. The goal of this reserve is responsible management of the digital assets held by the government by the Treasury Department.

At the end of the statement, Sacks thanked Trump for promoting the establishment of the strategic Bitcoin reserve and expressed gratitude to his government colleagues: "President Trump has committed to creating a strategic Bitcoin reserve and digital asset reserve, and today those commitments have been fulfilled. This executive order highlights President Trump's commitment to making the U.S. the 'global crypto capital.' I want to thank the president for his leadership and vision in supporting this cutting-edge technology, as well as his efficient execution in promoting the development of the digital asset industry."

"I also want to thank the president's digital asset market working group, especially Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, who provided important support for achieving this goal. Finally, Bo Hines, as the executive director of the working group, played a key role," he stated.

Establishing Two Asset Holding Mechanisms, with Bitcoin Strategic Reserve Advancing Legislation in Congress

According to the classification in the executive order, Trump's executive order establishes two different digital asset holding mechanisms:

• 1. Strategic Reserve, which only stores Bitcoin (BTC), with initial funding sourced from approximately 200,000 Bitcoins obtained by the government through criminal and civil forfeiture over the years. Treasury Secretary Bessent and Commerce Secretary Lutnick are authorized to explore ways to acquire more Bitcoin without increasing taxpayer burden, positioning it as a national-level digital value reserve.
• 2. Digital Asset Stockpile, which includes other digital assets besides Bitcoin—potentially including XRP, ADA, ETH, and SOL, with the Treasury Department responsible for "responsible management" of the digital assets held by the government. The government will only explore budget-neutral methods to purchase more Bitcoin and will not actively seek to increase the quantity of other digital assets in the stockpile. The executive order also requires a comprehensive audit of all digital assets currently held by the government to ensure asset management transparency.

In fact, as early as March 3, Trump stated that the U.S. crypto strategic reserve would include XRP, Solana (SOL), Cardano (ADA), Bitcoin (BTC), and Ethereum (ETH), and these assets could appear in the digital asset reserve required by this executive order. However, some industry insiders have questioned the inclusion of XRP and ADA, arguing that they lack the developer activity and decentralization characteristics of BTC and ETH.

Outside of Trump's executive order, the Bitcoin strategic reserve promoted by Senator Lummis is also undergoing the legislative process in Congress. Alex Xu, a research partner at Mint Ventures, pointed out that this "Strategic Bitcoin Reserve" is not the same as the "Strategic Federal Reserve" bill being promoted by Senator Cynthia Lummis at the federal level. The former can be directly controlled by the government, while the latter requires congressional legislation; the former does not have a separate budget for purchasing BTC (any increase requires congressional approval), while the latter would provide a separate budget for purchasing BTC, with the goal of buying 1 million BTC over five years. The budget source may come from a reassessment of the value of the U.S. existing gold reserves, thereby expanding the Federal Reserve's asset count and providing a budget for the Treasury to purchase BTC. David Sacks' statement that "the government will not acquire other assets for the reserve" does not mean that the public's impression of the Bitcoin strategic reserve suddenly becomes something that relies solely on forfeiture without separately spending money to purchase BTC.

Market Reaction: Bitcoin Price Drops and Then Recovers, Concerns About Increased Law Enforcement

Although the U.S. government claims it will develop budget-neutral strategies to acquire Bitcoin, the statement also explains that these strategies will not impose incremental costs on U.S. taxpayers, which has led to market expectations falling short and put pressure on Bitcoin's price. Previously, the market had expected that the U.S. might actively purchase more Bitcoin to supplement the reserve. As of the morning of March 7, Bitcoin's price briefly fell below $85,000, down 4.21% in 24 hours, before a slight recovery.

According to Arkham Intelligence data, the U.S. government currently holds approximately $18.28 billion in seized crypto assets, with Bitcoin accounting for the vast majority, totaling 198,109 coins, valued at about $17.87 billion. Additionally, the government holds $12.2 million in USDT and $11.9 million in ETH, while XRP, SOL, and ADA do not appear on the asset list.

Coinbase executive Conor Grogan posted on the X platform: "The U.S. government holds 198,109 Bitcoins, and this executive order means that approximately $18 billion in selling pressure will be reduced."

However, Galaxy Digital's research director Alex Thorn stated on X: "The maximum balance of Bitcoin available for the U.S. government to use as a strategic reserve is only 88,000 BTC, accounting for just 43% of the current government holdings. This is because out of the approximately 198,000 BTC currently held by the U.S. government, 112,000 BTC will be returned to Bitfinex."

Some market interpretations of this policy are rather pessimistic. Tech and crypto KOL @realwuzhe posted: "Trump just ordered the establishment of a national Bitcoin reserve. But it's just about properly managing the previously confiscated Bitcoins to ensure they don't crash the market. It also emphasizes that taxpayer money will not be used to purchase new Bitcoins. It's equivalent to creating a huge title without any new buying pressure. Thunderous noise, but very little rain, Bitcoin plummeted in response."

He expressed concerns about the U.S. government's increased law enforcement efforts. "The U.S. has now established a Bitcoin reserve but is not willing to use taxpayer money to buy coins. Where will the new coins come from? They will inevitably continue to be obtained through law enforcement actions. Next, the U.S. has a strong motivation to enforce actions against offshore exchanges and large holders."

Crypto industry KOL Chen Mo stated: "The establishment of the U.S. strategic reserve has been realized, and although it will not actively buy BTC, at least the formal purpose has been achieved, and it cannot be ruled out that other countries will buy. From the price reaction, it is below market expectations, and the impact of the Trump market on the overall market is expected to gradually weaken. The foreseeable events will become fewer, and the crypto industry will enter a new phase, with attention shifting back to the application layer. In the next 1-2 years, the relaxation of compliance and regulation can create more opportunities."

Meanwhile, Bitwise Chief Investment Officer Matt Hougan is more optimistic, analyzing that this executive order may bring the following impacts:

1. Significantly reduce the likelihood of the U.S. government "banning" Bitcoin in the future;
2. Significantly increase the likelihood of other countries establishing strategic Bitcoin reserves;
3. Accelerate the process of other countries considering establishing strategic Bitcoin reserves, as this provides a short-term window for them to position themselves before the U.S. may further purchase Bitcoin;
4. Make it more difficult for institutions to portray Bitcoin as a "dangerous" or "unsuitable for holding" asset—this includes quasi-governmental institutions from national account advisory platforms to the International Monetary Fund (IMF).

On the first day of the executive order's release, several crypto industry executives will participate in the "Digital Asset Summit" hosted by Trump in Washington, D.C. at midnight on March 8, Beijing time. Previously, Mike Alfred, founder of the digital asset investment platform Eaglebrook Advisors, posted on the X platform: "There are reports that the Trump administration is preparing to announce a zero capital gains tax policy on cryptocurrency sales at Friday's cryptocurrency summit (i.e., cryptocurrency sales will be exempt from capital gains tax)."

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