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Crypto Reporter
Shalini Nagarajan
Crypto Reporter
Shalini Nagarajan
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The cryptocurrency market retreated sharply on Tuesday, erasing earlier gains fueled by President Donald Trump’s weekend proposal for a US strategic crypto reserve. Optimism following Trump’s announcement on Truth Social quickly turned into caution as traders reassessed the viability and implications of the plan.
The total crypto market cap fell 12.3% to $2.85t, with Bitcoin dropping 9.8% to $83,694, Ether plunging 14.8% to $2,083 and XRP tumbling 17.7% to $2.30. Solana and Cardano suffered even steeper losses, each declining more than 20%.
The sell-off resulted in $1.08b in liquidations, affecting over 311,000 traders in the past 24 hours, CoinGlass data showed. Bitcoin alone accounted for $398.49m in liquidations, while Ethereum saw $209.73m in liquidations. Among altcoins, Solana lost $70.49m, XRP $62.89m and Cardano $44.15m.
Skepticism Grows Over Trump’s Crypto Reserve as Approval Timeline Remains Unclear
Trump’s January executive order set the foundation for the reserve, though it wasn’t until Sunday that he disclosed the specific cryptocurrencies involved, including Bitcoin, Ether, XRP, Solana and Cardano. While Bitcoin and Ether were positioned as the reserve’s cornerstone, the inclusion of altcoins raised questions about the legitimacy and stability of the plan.
Initially, the market surged following Trump’s Sunday post, with Bitcoin rebounding 20% from its November lows. However, uncertainty about implementation, regulatory hurdles and Congressional approval led to a quick reversal. Analysts at 10X Research suggested that the market may have overreacted, warning that an official legislative directive is likely months away. Instead of chasing hype, they viewed the rally as an opportunity to take profits.
Industry Voices Cast Doubt on Trump’s Plan, Calling It Risky and Misguided
Several key figures in the crypto industry demonstrated doubts about Trump’s strategic reserve plan.
Anthony Pompliano, founder of Professional Capital Management, told clients in a note that he opposed the initiative, despite holding significant investments in Solana and other altcoins. “This decision on a wide-ranging crypto strategic reserve is an unforced error that will be regretted in the future,” he wrote, warning that such a reserve could enrich insiders at the expense of taxpayers.
Billionaire investors Cameron and Tyler Winklevoss, co-founders of Gemini, voiced similar concerns. In X posts, they stated that only Bitcoin meets the criteria as a legitimate reserve asset, casting doubt on the inclusion of other cryptocurrencies.
Peter Schiff, a longtime Bitcoin critic, went further, calling Trump’s announcement “the biggest crypto rug pull of all time.” Schiff demanded a Congressional investigation into whether Trump’s team, family members or donors profited from the market reaction. He accused the administration of orchestrating a deliberate market manipulation scheme and called for transparency regarding internal communications leading up to the announcement.
February Ends with Bitcoin’s Second-Worst Monthly Performance in History
The Bitcoin market now faces an uphill battle to regain momentum. Analysts at Bitfinex noted that Bitcoin closed February with a 17.39% decline, making it the worst February performance since 2014 and the second-worst in history.
The recent decline has been amplified by massive Bitcoin ETF outflows, which peaked at $1.1b on Feb. 25, signaling weakening institutional demand. Historically, bull market corrections for Bitcoin have ranged between 18-22%, but the 28.3% drop from its January all-time high of $109,590 marks one of the deepest pullbacks since the FTX collapse in 2022.
Bitcoin’s seasonality also played a role in market sentiment. Since 2013, February has typically been a strong month, with an average 13.12% gain. However, this year’s decline was the largest post-halving February drop on record, according to Bitfinex.
Bitcoin Needs Strong Buying Pressure to Regain Bullish Momentum
Bitcoin and the broader crypto market will need strong inflows in the coming weeks to recover their bullish momentum. Analysts warn that much of this recovery will depend on macro factors, including the S&P 500’s performance and renewed institutional interest.
For now, Trump’s strategic reserve plan has introduced more questions than answers. Until there’s clear regulatory action, traders may remain cautious.
