After years of dishonest attacks, Trump claimed that a national cryptocurrency reserve would "elevate this critical industry." He also instructed his administration to "move forward on a Crypto Strategic Reserve," which would include the cryptocurrencies XRP, Solana, and ADA.

 The reserve will "obviously" incorporate bitcoin and ethereum as the "heart of the Reserve," he continued in a second post, adding that he "loves" the top two cryptocurrencies.

 The executive order that Trump issued on January 23 instructing his administration to form a "working group" to develop a regulatory framework on digital assets, including assessing a "national digital asset stockpile," is being expanded upon by his declaration on Sunday.

How Did It Affect Cryptocurrency Prices?
 While ethereum prices surged more than 13% from before the news to briefly beyond $2,500 in the early afternoon, bitcoin prices surged more than 10% from around the time of Trump's speech to more than $94,000 early Sunday afternoon.  Shortly after Trump's remarks, the prices of the lower market cap currencies he mentioned—XRP, ADA, and Solana—all increased by at least 20%.

How Would You Describe a "crypto Strategic Reserve"?
 Trump's executive order indicates the reserve would be "potentially derived" from cryptocurrencies the federal government has confiscated "through its law enforcement efforts," however the exact details of any cryptocurrency stockpile are still unknown.  In January, the New York Times reported that the federal government had already confiscated an estimated $19 billion worth of bitcoin, which it might keep for the purpose of building up a stockpile.  According to The Washington Post, the government has already sold off its cryptocurrency holdings on a periodic basis. This has historically caused cryptocurrency prices to decline; therefore, any attempts to just hold onto and accumulate that cryptocurrency would stop that from occurring.  It is unclear if Trump will attempt to stock the reserves with substantial quantities of new cryptocurrencies, which would undoubtedly benefit the cryptocurrency market and current holders but would also probably need congressional approval, according to the Times.

The main critic
 The announcement of a national stockpile has been welcomed by the bitcoin industry, but several economists have expressed reservations about the plan.  They highlight the volatility of cryptocurrencies and contend that the government's purchase of them is a risk that would largely favor current cryptocurrency owners and could ultimately wipe away billions of taxpayer dollars in the event that the market declines.  In November, Moody's Analytics chief economist Mark Zandi told the Post, "There's just no discernible logic to do it," in reference to a national stockpile.  "I can understand why a cryptocurrency investor would adore it.  I don't see the value outside of the cryptocurrency investor, especially if taxpayers must pay.

Why Do Proponents of Crypto Want A Stockpile?
 Advocates of cryptocurrencies think that a national stockpile would help reduce the national debt by increasing federal revenue through the growing value of the government's crypto investments, as well as by boosting the industry through government purchases of cryptocurrency and preventing losses from any government sell-offs.  In order to use bitcoin as a government "savings technology" and a means of "bolstering America's balance sheet," Sen. Cynthia Loomis, R-Wyo., filed a measure in July to create a national stockpile. According to the Post, the initiative would "cut the national debt in half."

Tangent
 Tether, a cryptocurrency that is based on the US dollar, was not mentioned in Trump's declaration on Sunday; nonetheless, according to the Post, the US has seized cryptocurrency that may be used as a stockpile.  According to public reports, Cantor Fitzgerald, which Lutnick long led, assists in managing the cryptocurrency's portfolio and recently reached an agreement that could give Cantor Fitzgerald a 5% ownership stake in Tether. This is significant because Trump's Commerce Secretary Howard Lutnick has connections to Tether.  Because of his government position, Lutnick has resigned from Cantor Fitzgerald and stated that he will withdraw from the company. However, Democrats have questioned his company's participation with Tether, including Sen. Elizabeth Warren, D-Mass.stating in a letter to Lutnick that she had "serious concern[s]" over his participation with Tether and that he will be "in a position to influence policies that may directly or indirectly impact Tether and the entire cryptocurrency industry" because of his position as commerce secretary.  A request for comment regarding Lutnick's involvement with the Crypto Strategic Reserve was not answered by the White House or the Commerce Department.

Important Background
 Trump emerged as a leading advocate for the cryptocurrency sector prior to the November election, garnering substantial financial backing from prominent cryptocurrency personalities as he unveiled a series of amicable proposals that included addressing stringent regulations, demanding that all remaining bitcoin be produced in the United States, and advocating for reduced interest rates.  As he headlined the Bitcoin Conference in July, the then-candidate also promised to establish a national cryptocurrency stockpile, stating, "Our government has violated the cardinal rule that every bitcoiner knows by heart: Never sell your bitcoin for too long."  During his inauguration, Trump even entered the cryptocurrency space by coining his own $TRUMP joke.

Trump's announcement on Sunday regarding the national stockpile follows other actions taken by the president to court the cryptocurrency industry while in office, including the appointment of prominent cryptocurrency supporter Paul Atkins to head the Securities and Exchange Commission, the creation of a position of "Special Advisor for AI and Crypto" (filled by former PayPal COO David Sacks), the revocation of previous Biden-era crypto guidance, and the creation of a working group to develop regulations for the sector.