Trump Crypto Shake-Up Miscalculation or Market Manipulation?

• The strategic crypto reserve plans stirred a market rally and immediate slump.
• Industry leaders are at odds with the plans for altcoins in the proposed reserve amid claims of manipulation with recent events.

US President Donald Trump finally announced the creation of a strategic crypto reserve after months of speculation. While the community expressed excitement for the development, the President’s announcement style shook things up in the crypto space.

Inside Scoop on Trump’s Crypto Reserve Shake-Up

In a Sunday X post, Trump directed the Presidential Working Group on Digital Assets to proceed with the country’s crypto reserve. Initially, Trump said the reserve would include three cryptocurrencies: XRP, Solana (SOL), and Cardano (ADA). 

Supporters of these digital assets praised Trump for his decision. However, many crypto evangelists were surprised by the absence of Bitcoin (BTC) and Ethereum (ETH) and questioned why the President failed to include the world’s two biggest cryptocurrencies in the country’s strategic reserve.

While these discussions were ongoing, Trump clarified in a follow-up post the addition of BTC and ETH to the US crypto reserve. “And, obviously, BTC and ETH, as other valuable cryptocurrencies, will be the heart of the Reserve. I also love Bitcoin and Ethereum,” Trump noted.

As mentioned in our previous news brief, Senator Cynthia Lummis championed the integration of Bitcoin into the US financial system. In July 2024, Lummis introduced a bill proposing that the US Treasury acquire up to 1 million BTC over five years.

As CNF discussed earlier, Trump embraced the idea of a strategic crypto reserve during his campaign. Shortly after his inauguration as President, he signed an executive order directing a working group to assess its feasibility. Thus, his decision to include a variety of assets rather than just Bitcoin has ignited mixed reactions in the crypto community.

Bitcoin supporters argue that BTC alone should form the basis of a national crypto reserve. Others think that including other cryptocurrencies marks a step toward broader adoption at the federal level.

The Crypto Market’s Reaction

Meanwhile, the global crypto market reacted swiftly to Trump’s announcement. 

The market cap increased by over 8% in the last 24 hours, rising from $2.81 trillion to $3.04 trillion. ADA led the rally with a 17.2% surge to $0.9. SOL also saw a sharp spike to $178 before settling at around $161.

Likewise, XRP increased from $2.19 to a $2.97 high before retracing to $2.68. 

Bitcoin also broke out from its bearish phase, crossing $90,000 and hitting a high of $95,043 before stabilizing at $92,500. Ethereum followed a similar trend, rising from $2,216 to $2,548 before stabilizing at $2,376.

Most of these digital currencies have shed their gains at the time of writing, with Bitcoin price down 5.94% to $87,752.28.

Speculations of Market Manipulation

The uproar over Trump’s crypto reserve declaration erupted immediately after the market’s reaction. Popular trader Teddy Bitcoins posted hours before the news broke about a $200 million bet on Bitcoin and Ethereum with 50x leverage.

The trader explained that the move is either a very rich degenerate or a market maker attempting to move the market meaningfully on the spot. Simply explained, the trader only had to put up 2% of the $20 million instead of the entire sum in the trade. The trader borrowed the remaining $196 million from the exchange, amplifying potential gains and risks. 

With this degree of leverage, even a 2% price reduction might have resulted in the trader losing the whole $4 million position. However, contrary to this expectation, BTC and ETH surged, making the highly leveraged position potentially very profitable.

Teddy Bitcoins returned to X after Trump’s announcement, raising speculations about insider trading. Another trader, Mike Alfred, took the rumors further, sarcastically commending Trump and his inner circle for converting political influence and power into money.

Currently, there is no concrete evidence linking the leverage trade to Trump’s team. However, the series of events aligned with the sharp price increase has left many with more questions than answers.