Why Bitcoin is Falling Despite Trump’s ‘Strategic Reserve’ Push

BTC Price: Just earlier this month, US President Trump announced the creation of a 'strategic reserve' that includes multiple cryptocurrencies including, XRP, SOL, ADA, Ethereum and ofcourse, Bitcoin. While this was part of Trump's vision to make the US the 'crypto capital' of the world, investors had kept high expectations from the price trajectory of Bitcoin after this strong backing.

Initially, Bitcoin did witness a rally, touching the $94k price mark again after trading below the psychological $80k level. Other crypto coins, also followed the trail, with XRP and ADA surging over 24% and 58%, respectively. Investors expected Trump's recent call for the creation of reserves to be the first step in bringing VDAs (Virtual Digital Assets) under the ambit of regulatory play.

However, things aren't turning out as investors expected, with Bitcoin once again plummeting below the $80K mark.

Why Bitcoin is falling?

While crypto prices are highly sensitive to fluctuations, they don’t move in isolation. The current uncertainty looming in the geopolitical space, owing to Trump's policy flip-flop has made the outlook different to gauge. For instance, Trump announced the implementation of trade tariffs on imports from Mexico and Canada. However, this imposition was later put on a one-month halt.

Another reason for Bitcoin’s decline, despite the US President’s push for a strategic reserve, is that no fresh demand is being created. The reserve is being built from existing assets and the government won't be mining any additional Bitcoins. This was quite different from what investors had previously expected, leading to a strong sell-off in the market.

Bitcoin is not alone

The sudden change in tariff policies is making things difficult for investors, pushing them to turn more risk-averse. Bitcoin is not the sole victim of this uncertainty, other cryptocurrencies (including ADA and SOL) and the dollar index also witnessed a major decline. The tech-heavy index, Nasdaq, fell into the correction territory last week as investors remained concerned over the future outlook.

All these factors together pushed the CBOE Volatility Index to its highest level since the beginning of this year. So far, the index has surged by over 55% to touch the 27.86 mark (on year-to-date basis).