Explained: Why Did Trump’s Bitcoin Reserve Plan Crash the Crypto Market?

The crypto market is going through a rough patch as traders react to tariffs and Trump’s Bitcoin Reserve order. Bitcoin has dropped by 4.8% to $81,729, while Ethereum has taken an even bigger hit, falling 8% to hover around $2,000. Dogecoin is the biggest loser among the top 10 cryptos, sliding 13% to $0.16.

But what’s really driving this sell-off? Despite the buzz around Trump’s plan to establish a Strategic Bitcoin Reserve, the market’s response has been far from bullish. Instead of rallying, prices are sinking, and liquidations are piling up. So, what’s going wrong?

Analysts at QCP Capital seem to have an explanation. Let’s break it down.

Crypto Liquidations Cross $334 Million as Sell-Off Continues

The price drop has triggered massive liquidations, with Bitcoin, Ethereum, and XRP leading the sell-off. In the past 24 hours, over 109,704 traders have faced liquidations, totaling more than $334 million.

Bitcoin alone saw $186.35 million in liquidations, with long traders losing $123.21 million. Ethereum followed with $40.84 million in liquidations, while XRP lost $7.3 million.

Other altcoins, including Solana (SOL), Cardano (ADA), Dogecoin (DOGE), Sui (SUI), and Litecoin (LTC), also saw heavy sell-offs, adding to the market’s instability.

Bitcoin and Ethereum Struggle to Stay Above Key Levels

Bitcoin has fallen 3% in the past 24 hours, now trading at $86,409. Despite a 1.9% gain over the past week, market sentiment remains weak, with trading volume dropping 24.63%.

Ethereum is also struggling, fighting to stay above the $2,000 support level. Analyst Ali Martinez warns that if ETH falls below $2,114, it could drop to $1,250 in the coming weeks.

XRP is facing similar pressure, down 7.31% in the last 24 hours to $2.36. Uncertainty over the U.S. Bitcoin Reserve plan has only increased volatility.

Did Trump’s Crypto Reserve Plan Backfire?

Trump’s proposal to include ADA, XRP, and SOL in the U.S. Strategic Reserve has met resistance. Industry leaders like Coinbase CEO Brian Armstrong and Real Vision’s Raoul Pal argue that Bitcoin should remain the main reserve asset. Armstrong calls Bitcoin the “clear successor to gold,” while Pal suggests a market-cap-weighted index instead of picking specific altcoins.

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At the same time, newly released U.S. government crypto disclosures show no holdings of SOL, ADA, or XRP—contradicting previous speculation. Crypto Czar David Sacks clarified that while the U.S. will maintain a digital asset stockpile, it will only include assets obtained through forfeiture, with no new acquisitions planned.

On-chain data confirms that the government holds 198,000 BTC but no ADA, XRP, or SOL.

U.S. Crypto Reserves May Be Converted to Bitcoin

The U.S. government currently holds 60,850 ETH ($122.96 million), 122 million USDT, and 40,293 BNB ($22.34 million), among other assets. If sold, these could be converted into about 5,004 BTC.

Sacks has hinted at reallocating some of these assets into Bitcoin to strengthen the reserve, reinforcing the administration’s Bitcoin-first approach.

With growing skepticism around the crypto reserve plan, market uncertainty is likely to persist, keeping traders on edge.

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