A couple of Presidents Donald Trump’s posts about his plans for a US crypto reserve “triggered a market throughout the market” in cryptocurrencies on March 2, with a global market capitalization rising almost 7% to $ 3.04 trillion, cointelegraph reported.
However, in closer analysis, a crypto strategic reserve – maybe along the US Strategic Petroleum Reserve lines, created in the 1970s after the Arab Oil Embargo – raised many questions it answered.
There was a controversy, if not confused, about what kind of crypto would develop a “reserve,” as well as if the US would buy crypto for reserve, compared to simply increasing its stock confiscated crypto when law enforcement produces seizures.
The following two posts of Trump on the Social Social platform also drew the investigation. Notably, the first post mentioned only the three smallest tokens of the expected reserve by market capitalization: XRP (XRP), Solana (Sol) and cardano (Ada).
Source: Donald Trump
A few minutes later, almost as a thought, the President was re -posted, this time the two largest cryptocurrencies: Bitcoin (Btc) and ether (Eth).
Source: Donald Trump
Fair or unfair, some critics mentioned that the President’s own memecoin was launched in Solana, so that the platform could be more front.
Others in the crypto community were surprised at the integration of altcoins. Some assume that the US may one day have a Bitcoin strategic reserve because the BTC is the oldest, safest, most widely possession and best cryptocurrency capital. But a reserve with Altcoins too?
“An unexpected error”
“This decision on a broadly strategic reserve is an unexpected error that regrets the future,” Anthony Pompliano, founder and CEO in Professional Capital Management, write On March 3. “It seems that we are getting a randomly sorting of speculation tools to enrich the insider and creators of these coins at the cost of the US taxpayer.”
Crypto tokens such as ETH, Sol, XRP, and ADA do not adapt to the “Reserve” framework, Pompliano added. They are similar to technology stock Strategic reserve of maple syrupa less than a commodity, welcomed.)
“The skeptics said the most winning winner was Trump himself, who rolls a Crypto venture of himself that brings millions of dollars to tokens that are set to include in the reserve, ”the New York Times mentionedAdding that Ripple, “that the XRP token is one of five Trump’s said to be included … has donated $ 45 million to an entire industry seeking to help the election of Trump and other Republicans.”
Related: XRP, Sol or ADA belongs to a US crypto reserve?
Others have suggested, however, that these altcoins better reflect the direction of monetary blockchains. For example, Cardano is “better energy, great cost, determinist, decentralized, scalable and able to handle programmability today” than Bitcoin, mentioned A reader who objected in the direction of Pompliano’s letter.
Altcoins: a “double-edged sword”
Yu Xiong, a professor and director of the Surrey Academy for the Blockchain and Metaveverse application at Surrey Business School, University of Surrey, has been called the integration of Altcoins in a state -supported reserve of a “double blade” with the pros and cons.
A multi-asset reserve offers greater variety and less dependence on Bitcoin, which now costs about half of the total crypto market value, he told Cointelegraph, which further explains:
“Defi Ecosystem of Ethereum (~$ 50 billion total amount locked) and Solana’s high-speed transactions (65,000 TPS) represent technological diversity. “
The integration of altcoins also recognizes greater blockchain use cases. Ukraine raised $ 135 million in crypto donations through ETH, Sol and other coins after Russia raided it in 2022, he added.
But there are also potential collapse, including regulation uncertainty. The SEC still has the ongoing lawsuit against Ripple, for example. “A government holding these tokens can face backlash,” Xiong said.
The dangers of liquidity are another concern. Given how thin these coins are exchanged, government purchases or sales can send crypto prices that are sinking or crashing.
BTC has a larger trading volume than other coins, of course. In a recent 24-hour period, the volume of Bitcoin on all platforms raised $ 54.8 billion, compared to ETH’s $ 23.4 billion, the $ 3.6 billion of XRP-which could indicate a “lack of depth for the big reserves” to some of the Altcoins, Xiong said.
Related: Why is the Ripple Sec case still in the middle of a sea of resolutions?
This in turn, the fears of manipulation in the market can raise. “The 2014 US Treasury sale of 30,000 Silk Road BTC has led to a bit of interruption, but today, the sale of 3% of the Bitcoin supply (~ $ 5.5 billion) can crash prices by 15%,” Xiong told cointelegraph, citing coinglass models.
Will it benefit from the crypto sector?
There is a bit of doubt that a US crypto reserve will give an arm shot in the crypto and blockchain industry. It is a signal of institutional reception, accelerating the adoption of traditional financial companies, similar to that Blackrock has launched the Bitcoin ETF, which attracts $ 18 billion to possessions under management for six months, mentioned Xiong.
It will also help to stabilize the market. In hours of intense volatility, government reserves could act as a buffer, as the US Strategic Petroleum Reserve (SPR) showed in 2022-presidential Joe Biden ordered The release of 180 million barrels of crude oil from SPL to stabilize energy prices in the world. Oil prices sank after the Russian invasion of Ukraine.
As Xiong said in Cointelegraph:
“A US reserve can reflect the role of strategic oil reserve energy security, positioning the crypto as a geopolitical tool.”
But there are risks attached to state -supported strategic reserves. Crypto markets, in particular, remain fragile, Xiong continued. The 30-day annual volatility of Bitcoin, which often exceeds 100% before 2022, bounced between 30% and 60% In the past year, while the volatility of crude oil became less than 35%. Higher volatility has increased concerns about manipulation or accidental distortion in the market, Note Xiong.
Outside of cryptovers, there are also questions about equity and price stability. How is the government cautioned against Crypto’s volatility, Question The New York Times. Moreover, “the taxpayer’s money used for a speculation -aware investment has gained real concern.”
“It will definitely be great for current bitcoin holders and equally a bad deal for taxpayers,” Eswar Prasad, an economist at Cornell University, said the times.
Asked if a US crypto reserve could be a game changing for the crypto and blockchain industry, Xiong told Cointelegraph that its importance was figurative but also “strategically significant.”
A US crypto reserve can offer a “cover” to institutional investors, such as pension funds, for example, which may sit on the fence when investing in cryptocurrencies.
If it is ok for the US government, it may also be suitable for corporate treasury and institutional investors, operating thinking. “Pension funds and insurers – management of $ 50 trillion worldwide – can increase crypto allocations,” Xiong said, as seen after approved by Bitcoin ETF in early 2024.
Asked to summary the impact on the crypto industry from the latest strategic reserves, Xiong replied: “Short-term optimization, long-term caution.”
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