Over the last three days, the crypto market has been even more volatile than usual. This has mainly been due to speculation about a strategic Bitcoin reserve. We discuss this in the article below.
The volatility in Bitcoin and altcoins over the past week has been down to the uncertainty over a possible US cryptocurrency strategic reserve. This idea was first discussed before the new government took office. It was then poised for discussion at a later time. However, the past weekend has seen the idea reignited with an announcement saying what coins may be included.
The Cryptocurrency Reserve
The named currencies were Bitcoin, Ethereum, plus ADA, XRP, and SOL. It was also mentioned that Bitcoin and Ethereum will be at the heart of the reserve, indicating that others may or may not still be in contention. This will see a Crypto Summit held at the Whitehouse on Friday 7th of March, where the possibility of a reserve will be discussed.
Obviously, this saw huge shifts in the market. Bitcoin had previously suffered a paltry year, with buyers in 2025 down on their earnings. However, a 10% jump soon saw it reach $94,000. The Bitcoin price today has seen it drop to around $83,730, though it rising and falling intermittently. The news alone has sparked a new heightened level of volatility, where short-term gains are aplenty.
The biggest of the winners were the other mentioned altcoins. Ethereum followed Bitcoin with a 10% boost. However, Cardano had a massive increase of 60%. SOL moved up by 12% with XRP jumping 20%.
The Advantages of a Cryptocurrency Reserve
A reserve is a store of commodities that are not used but held back for times of emergency. For example, countries may have reserves of wheat or oil. This can be used if stocks become low, to alleviate price increases. Many countries hold reserves of foreign currencies, which helps them hedge against inflationary pressures. While many are questioning the value of a reserve based on digital assets, and their increasing volatility, there are many advantages to doing this.
Bitcoin and cryptocurrency were once thought to be a hedge against inflation, but this has been proven wrong. However, it is an alternative store of wealth, which when combined with other assets such as gold, can help against inflation itself.
Across the world, countries are already in debates regarding their own reserves of digital assets. Switzerland is taking it to a public referendum, while Germany, Poland, and others are also discussing the possibility. If a large economy like the US gives it the go-ahead, then it could see a space race of sorts unfold. The US would be in a prime position to be at the forefront of this and would be able to shape and determine global crypto regulations in the future.
Elsewhere in Crypto
With any volatility, and its huge gains, come the losses. This was seen as the fallout from the strategic reserve announcement, with some detractors questioning its legitimacy, even from within the crypto community itself. There were around $1 billion in liquidations as the markets closed on Monday night.
Trade volume was 4% down on the day before, understandable given the breaking news. This resulted in a Bitcoin decline of around 10.5% with Ethereum falling 16.5%. A large fall was seen in SOL, which dropped by 21.3%. It was pipped only by Cardano which fell 27.4%. More worrying was that a large amount of this came from long-held positions. Around $867 million came from this, with a large percentage of that from Bitcoin.
Not all voices were excited at the prospect of a reserve. There are still many questions hanging in the air, which will need clarifying at the summit on Friday. Mostly, criticism was directed at the inclusion of altcoins other than Ethereum. ADA, SOL, and XRP seemed to be a strange choice, given their marginally unproven track record. Bitcoin is seen as much safer, yet even it may face increased scrutiny and regulatory approval.
There are also questions about where the funds for this will come from. Most countries that hold reserves have an abundance of natural resources. The surplus revenue from this is then placed into strategic reserves in case of an emergency. This is a possible way the US could fund its plans.
Crypto has always been volatile, and probably always will. However, this shows an increasing acceptance by traditional financial institutions and governments. Whatever happens, this can only signal positive things for crypto in the long run. With many governments already holding stores of cryptocurrency, particularly Bitcoin, this is not the revolutionary scheme it is being made out to be. Now could be a great time to put long-term investments into Bitcoin, ride the short-term volatility, and see where it takes you further down the line.
Lynn Martelli is an editor at Readability. She received her MFA in Creative Writing from Antioch University and has worked as an editor for over 10 years. Lynn has edited a wide variety of books, including fiction, non-fiction, memoirs, and more. In her free time, Lynn enjoys reading, writing, and spending time with her family and friends.
