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Why bitcoin bulls aren’t happy about Trump’s plans for something they’ve long wanted: a crypto reserve
A backlash over President Donald Trump’s plan to include three small and relatively risky tokens in an eagerly awaited U.S. strategic crypto reserve helped largely erase a rally for bitcoin and other digital assets on Monday.
Trump over the weekend announced on his social-media platform Truth Social DJT that the strategic crypto reserve he proposed would include not just bitcoin BTCUSD and ether ETHUSD, but also solana SOLUSD, cardano ADAUSD and XRP XRPUSD.
The inclusion of smaller tokens in the reserve “kind of muddles the value of bitcoin, because you have these cryptocurrencies that are not highly valuable in the same way bitcoin is,” Alexander Blume, chief executive at crypto investment advisory firm Two Prime, said in a phone interview.
“They’re not scarce in the same way and they’re not decentralized in the same way. So it reduces the value and signal of creating a bitcoin reserve,” Blume said.
Major cryptocurrencies rallied on Sunday following Trump’s posts about the reserve, before erasing a large portion of, if not all, of their gains on Monday.
Bitcoin, the largest cryptocurrency by market cap, went up over 10% on Sunday to almost $95,000, before falling 9% on Monday to around $85,850, according to Dow Jones Market Data. Ether rose 13.6% on Sunday before pulling back 15.7% on Monday. Solana went up 24.5% on Sunday, before falling 19.3% on Monday. Cardano surged 72% on Sunday, before losing 23% on Monday. XRP went up 34% on Sunday, and then fell 17% on Monday.
Several crypto-industry leaders, including Trump supporters, voiced concerns about adding smaller tokens into the strategic reserve. Bitcoin bulls had hoped that U.S.’s potential creation of a bitcoin reserve could strengthen the asset’s potential as a store of value and “digital gold” — having often compared the benchmark crypto to gold GC00 and citing their common characteristics such as a limited supply and decentralized nature.
Tyler Winklevoss, the co-founder of crypto exchange Gemini who endorsed Trump during his presidential campaign, said that he does not think solana, XRP and cardano are suitable for a strategic reserve.
“Many of these assets are listed for trading on Gemini and meet our rigorous listing policy criteria, but with respect to a Strategic Reserve it is another standard. An asset needs to be hard money that is a proven store of value like gold,” Winklevoss wrote in a Monday post on X.
Ether, XRP, solana and cardano are the second, fourth, sixth and eighth largest cryptocurrencies by market capitalization, respectively, according to data from CoinMarketCap. Others among the top eight tokens include Binance’s BNB coin as well as stablecoins Tether USDTUSD and USDC USDCUSD, which are supposed to have their values pegged to the U.S. dollar.
“Taxation is theft. It should be kept to a minimum. It’s wrong to steal my money for grift on the left; it’s also wrong to tax me for crypto bro schemes,” Joe Lonsdale, co-founder of Palantir Technologies Inc. PLTR and a longtime Trump supporter, said in a post on X .
Brian Armstrong, chief executive of Coinbase Global Inc. COIN, the largest crypto exchange in the U.S., wrote on X that for the crypto reserve, “just [having] bitcoin would probably be the best option — simplest, and clear story as successor to gold.”
Bitcoin has a maximum supply of 21 million, while XRP, cardano and solana also have a much more concentrated ownership structure than bitcoin, Two Prime’s Blume noted. They were also supposed to serve different purposes, as XRP was degined to be used for international payments, while the Ethereum, Solana and Cardano blockchains are seen as competitors to each other in aiming to power decentralized applications.
“It feels like you made a gold reserve, but then you added three of your favorite companies into the reserve and you say, ‘Well, they are the same as gold,’” said Blume.
Such a plan could also undercut expectations for more nations to follow suit if the U.S. establishes a bitcoin reserve, he noted.
“If the U.S. says bitcoin is valuable, then other countries are going to be more likely to treat it as a store of value as well,” Blume said. “But I don’t think they are going to be spurred on to buy Cardano in the same way.”
To be sure, details about the potential strategic crypto reserve remain unclear, noted a group of analysts at Alliance Bernstein led by Gautam Chhugani.
It is unclear whether the strategic reserve can be created simply by an executive order or whether it would require the Congress to pass a specific bill, the analysts said. Also unknown is how the U.S. government might fund the reserve and what the allocation among different tokens in the reserve might look like.
If the reserve does include the five crypto tokens Trump named and their allocation is market-cap-weighted, it would imply a 75% allocation to bitcoin and a 11% allocation to ether, according to the Bernstein analysts. XRP, solana and cardano would together take up about 14% of the reserve.
“The more time that passes, the more questions people are surfacing around how the strategic reserve would work and what’s likely to be included over time,” Seth Ginns, managing partner and head of liquid investments at crypto investment firm CoinFund, said in an interview.