Bitcoin price today: back below $90k after sharp surge on crypto reserve promise

Investing.com-- Bitcoin climbed on Monday, extending an overnight rebound after U.S. President Donald Trump listed five cryptocurrencies he will include in a strategic reserve, boosting crypto markets. 

The world’s largest crypto rallied as high as $94,901.96, but later lost a portion of its gains, steadying at $89,421.0 by 10:02 ET (15:02 GMT). The cryptocurrency is up roughly 15% since plunging below $80,000 on Friday. 

Trump outlines Bitcoin, four other cryptos for promised reserve 

Trump on Sunday repeated his plans for a Crypto Strategic Reserve, stating that he had directed an executive group to proceed with the project. He claimed that Bitcoin, Ether, XRP, Solana, and Cardano will comprise the reserve. 

“A U.S. Crypto Reserve will elevate this critical industry…which is why my Executive Order on Digital Assets directed the Presidential Working Group to move forward on a Crypto Strategic Reserve that includes XRP, SOL, and ADA,” Trump said in a social media post. He also mentioned Bitcoin and Ether. 

Trump had last month signed an executive order to explore a regulatory framework on crypto, including the establishment of a strategic digital assets reserve. But the order had made no mention of Bitcoin, and had provided few details on what the regulatory framework would entail.

Trump is now set to hold his first White House crypto conference this Friday, where he will likely offer more insight into his plans for crypto. 

How will Trump’s crypto reserve work? Analysts weigh in

While Trump’s crypto promises did spark a sharp rebound in crypto prices, the president provided scant cues on how his promised reserve will be formed.

Analysts had also expressed doubts over the reserve. If Trump were to form the reserve through an executive order, there will be very limited funds he will actually be able to deploy towards government purchases of crypto. The scope of the reserve will also be limited, in that an administration after Trump’s could easily disband the reserve.

To build a digital asset reserve akin to the Strategic Petroleum Reserve, Trump will need to seek Congressional approval. While such a scenario will allow for much more funding to be deployed towards the reserve, it also appears unlikely that Congress- despite having a Republican majority- will back Trump’s reserves plans, given that cutting government spending and reducing the fiscal deficit has been one of Trump and the Republican party’s top agendas. 

"We think a realistic path could be that the U.S government can convince the Congress, that Bitcoin is the new digital gold/global store of value and a gold revaluation/gold reserve reallocation makes sense," Bernstein analysts led by Gautam Chhugani said in a note. "However, buying other blockchain assets from Fed funds or treasury funds is a difficult sell."

The inclusion of digital assets beyond Bitcoin in the U.S. crypto reserve came as an unexpected decision for the crypto community.

"The position of Bitcoin as a ‘digital gold’ holding for the U.S. government was expected," analysts said. 

"ETH and SOL are the two most used blockchain networks, and holding their native assets supports the growth of the industry - but the rationale for a sovereign to hold it in reserve is unclear," they added. 

The U.S. government currently holds approximately $18.9 billion in cryptocurrency, primarily Bitcoin, compared to the $750 billion market value of its gold reserves.

According to Citi analysts, if the government were to announce further plans to become a strategic holder of digital assets, it “would add to the perceived legitimacy to the asset class." However, they point out that the criteria for selecting such assets remain unclear.

Moreover, Citi cautions that pre-announcing investments could impact market prices unfavorably for the investor, drawing a parallel to the UK’s gold sales in the late 1990s.

Crypto price today: Altcoins soar on Trump mentions

Broader crypto prices rallied on Monday, with the altcoins mentioned by Trump clocking steep gains.

World no.2 crypto Ether surged over 4% to $2,288.32, while XRP jumped more than 16%. 

Solana added around 12% , while Cardano rallied over 48%, vastly outpacing its altcoin peers.

Polygon traded flat. 

Among meme tokens, Dogecoin added nearly 8%, while $TRUMP rose roughly 9% in an extended rebound from record lows.

Trump’s comments helped lift crypto markets, which were nursing steep losses over the past week amid rapidly worsening risk appetite, as well as a seeming lack of liquidity in the sector. Several whales were also seen cashing out as Bitcoin tumbled below $90,000. 

Ambar Warrick contributed to this report.