On March 7, QCP Capital posted on its official channel that the market has been eagerly awaiting the White House crypto summit tonight, but Trump, through the signing of an executive order, preemptively announced the plan to establish a strategic BTC reserve and a U.S. digital asset reserve, thus breaking the expectations. Although this move is widely seen as beneficial to BTC, the market reacted in the typical "sell on news" manner, with BTC plummeting from $90,000 to $85,000 after the signing.
The timing of the signing indeed caught many off guard, especially those who were preparing for a more optimistic outcome from the summit tonight. Volatility has dropped significantly, and risk capital has reversed to favor put options, as bullish short-term positions were quickly unwound.
This instinctive sell-off reaction may stem from the market realizing that there is no actual budget allocation for BTC purchases in the near term. Instead, the reserve will initially be capitalized using BTC already held by the U.S. government, primarily obtained through criminal or civil asset forfeiture. However, this does not preclude future BTC accumulation. The Treasury Secretary and Commerce Secretary have been authorized to explore budget-neutral strategies to acquire more BTC without increasing the tax burden.
While this is not the direct positive catalyst many had hoped for, it is still structurally positive for cryptocurrencies. The possibility of Silk Road BTC random sell-offs disrupting the market has been eliminated, and the U.S. government has reaffirmed its commitment to a long-term crypto strategy.
With the announcement of the strategic BTC reserve, expectations for the White House crypto summit tonight have cooled. Instead, the focus will be on tonight's nonfarm payroll (NFP) data. Given the fragility of the stock market, any surprises in the data could trigger volatility in risk assets, including cryptocurrencies.
