There is a strong correlation between Elon Musk, President Donald Trump, and crypto bros. So you could imagine the bros’ elation on Thursday when Trump announced a national “bitcoin reserve,” funded by bitcoin and other cryptocurrencies taken in federal government seizures.
One wrinkle: Trump’s “crypto czar” (and Musk lackey) David Sacks wrote on X, “The Reserve will be capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings. This means it will not cost taxpayers a dime.”
The expectation in crypto circles had seemingly been that the federal government would buy bitcoin to populate a national reserve, just like it buys oil for its petroleum reserves—which, thanks to the power of supply and demand, would raise the price of bitcoin (and other currencies). But announcing the government wouldn’t make additional purchases has led to a sharp drop in crypto prices.
The proposal isn’t all bad for the bros. Sacks announced that the government would simply hold on to the seized coins, not sell. Take supply out of the market, and the demand side gets a boost; hence, prices are stabilized for crypto assets that have little to no inherent value. But that wasn’t enough to quell the fury from the crypto community.
Treasury Secretary Scott Bessent
As a result, the Trump administration is doing one of its patented walkbacks. “[Treasury Secretary Scott] Bessent, in an interview, said seized crypto assets would go into the reserve first ‘then we'll see what the way forward is for more acquisitions for the reserve,’” reported Reuters on Friday.
But don’t worry, because, as Sacks noted in his X post linked above, “The Secretaries of Treasury and Commerce are authorized to develop budget-neutral strategies for acquiring additional bitcoin, provided that those strategies have no incremental costs on American taxpayers.”
So you see, the reserve won’t cost taxpayers a dime, except they’re looking for “more acquisitions” that will certainly cost taxpayers a dime (and likely far more), but it will all be “budget neutral” and feature “no incremental costs” on taxpayers.
I know bullshit market manipulation when I see it.
Over at Reddit, the crypto subreddit, which is still smarting from the Trump and Melania Trump rugpulls (regular people getting screwed by worthless meme coins), has been vicious. Posts headlined “In your opinion, is crypto's primary purpose for this administration to just launder money from foreign entities?” and angry memes abound.
And there’s one final dynamic at play—the original promise of crypto was a decentralized currency free from the manipulations of national governments. It’s a tech-libertarian utopia idea.
And now you have bros cheering a government—the world’s largest economy, no less—actively meddling in the crypto market and making moves that clearly manipulate prices. The original “decentralized” fantasy may never have been realistic, but this crypto reserve makes an overt mockery of that dream. That has further divided the crypto community.
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