WASHINGTON (TNND) — President Donald Trump’s decision to roll out what he and other supporters are calling a cryptocurrency strategic reserve initially saw the industry make huge gains off the weekend’s announcement.
But Bitcoin and Ethereum were both down during Monday’s stock market dip.
Some crypto traders are now questioning the president’s decision.
In a post on his Truth Social, the president told followers he would create a basket of digital assets similar to the strategic petroleum reserve, which Trump saID would include crypto leaders Solana, Cardano, Bitcoin, and Ethereum. Typically, such reserves are used in times of crisis or supply chain disruptions.
Former President Joe Biden, for example, released millions of barrels of crude from the country’s strategic oil reserve to level out oil prices during Russia’s initial invasion of Ukraine. Biden’s decision kept oil prices low, and subsequently reduced pain at the gas pump for millions of Americans.
It’s not yet clear how Trump’s reserve will work, nor do analysts know how officials will collect the coins. There are also ongoing questions about the use-case for cryptocurrencies, beyond the blockchain technology that is used to mine many of the most cryptocurrencies.
Initially, Solana and Cardano rose by 21% and 61%, respectively, after Trump’s roll out, according to the crypto-tracking site CoinGecko. Bitcoin also rose by 9%, and Ethereum jumped 12%. Bitcoin and Ethereum fell back to earth by Monday, having coughed up most of the gains they made after the announcement.
Questions are swirling about what role Trump’s artificial intelligence (AI) czar David Sacks played in the move.
Sacks’ crypto fund Craft Ventures has holdings in all five of the coins Trump mentioned. Sacks has previously said that he sold all of his crypto holdings before joining the Trump administration as both a crypto and artificial intelligence, but it’s not clear whether Craft Ventures has followed suit.
Shortly before Trump’s announcement, an investment trader took out a $200 million 50x leverage long position on Bitcoin, a purchase that resulted in $6.8 million in profits, CryptoNews reported on Monday. That fueled speculation about who was behind the purchase.
Sacks said he’s undergoing an ethics review, and he will reveal evidence of his claims after the review has concluded.
Some crypto investors have pushed back against what they see as the latest conflict of interest involving Trump.
The most recent example they point to is the president profiting from promoting his so-called memecoin $Trump before he was inaugurated in January. Last week, the Securities and Exchange Commission announced memecoins would not be subject to regulatory oversight, calling the alternative coins something akin to a collectible rather than a security.
Memecoins are a type of joke — or meme — that maintain their price level for as long as the joke remains relevant on social media. They are pumped up on podcasts and in tweets by users who discuss how the meme is funny or how it could possibly be humorous.
“This is getting egregious,” software developer Nikita Bier wrote in a since-deleted tweet. “Every 2 weeks there is a kickback to the family. Completely delegitimizes all the work DOGE is doing.” Brier was responding to a post by famed venture capitalist Joe Lonsdale, who blasted the reserve as a gimmick.
In his tweet, Lonsdale argued the Trump administration should be devoting whatever funds available to paying down the national debt, which is now hovering around $37 trillion.
Trump’s election was supposed to bring clarity to the industry, but the early returns are not looking good, according to Stephen Findeisen, better known as Coffeezilla on Twitter and YouTube. Coffeezilla investigates cryptocurrency and financial frauds.
“We were all told that we are going to get some rules of the road with crypto in this cycle, but instead of rules of the road we just have no rules, and those are the rules of the road,” Coffezilla said in a recent podcast. He was referring to the SEC’s rules on memecoins.
