A Market Rebound and Mixed Reactions.

A pair of posts by President Donald Trump regarding his plans for a US crypto reserve triggered a significant marketwide rebound in cryptocurrencies on March 2. The global market capitalization surged nearly 7%, reaching $3.04 trillion, according to Cointelegraph. However, a closer examination reveals that the concept of a crypto strategic reserve—similar to the US Strategic Petroleum Reserve established in the 1970s—raises numerous questions.

Controversy Surrounding Crypto Inclusion

There has been considerable debate about which cryptocurrencies would comprise this proposed reserve. Critics are questioning whether the US would purchase crypto for the reserve or simply add to its stock of confiscated assets from law enforcement seizures. Trump’s posts on the Truth Social platform have also drawn scrutiny. In his first post, he mentioned only the three smallest tokens by market capitalization: XRP, Solana, and Cardano. A few minutes later, he referenced the two largest cryptocurrencies: Bitcoin and Ether.

Critics Weigh In

Some critics noted that Trump’s own memecoin was launched on Solana, which may have influenced his initial focus. Others in the crypto community expressed surprise at the inclusion of altcoins in the reserve. Many assumed that the US would eventually establish a Bitcoin strategic reserve, given that BTC is the oldest and most widely owned cryptocurrency. However, the inclusion of altcoins has raised eyebrows.

Anthony Pompliano, founder and CEO of Professional Capital Management, expressed his concerns on March 3, stating, “This decision on a wide-ranging crypto strategic reserve is an unforced error that will be regretted in the future.” He argued that tokens like ETH, SOL, XRP, and ADA do not fit the traditional reserve framework, as they resemble technology stocks more than hard money or natural commodities typically found in strategic reserves.

Potential Winners and Losers

Skeptics have pointed out that the most obvious beneficiary of this proposal could be Trump himself, who has launched a venture that carries millions of dollars in tokens set to be included in the reserve. The New York Times reported that Ripple, whose XRP token is among the five mentioned by Trump, donated $45 million to a PAC aimed at supporting Trump and other Republican candidates.

Conversely, some experts argue that the inclusion of altcoins may better reflect the evolving landscape of blockchain-based currencies. For instance, Cardano is touted as being “more energy efficient, cost-efficient, deterministic, decentralized, scalable, and able to handle programmability today” compared to Bitcoin, according to a reader who disagreed with Pompliano’s stance.

Expert Opinions on a Multi-Asset Reserve

Yu Xiong, a professor and director of the Surrey Academy for Blockchain and Metaverse Applications at the Surrey Business School, described the inclusion of altcoins in a state-backed reserve as a “double-edged sword.” He noted that while a multi-asset reserve could offer diversification and reduce reliance on a single cryptocurrency, it also introduces complexities and risks.

As the crypto market continues to evolve, the implications of Trump’s proposed reserve will likely remain a topic of heated debate. Investors and analysts alike will be watching closely to see how this initiative unfolds and what it means for the future of cryptocurrencies in the United States.