Market Nosedives 12% as $1B Liquidations Follow Trump’s Reserve Proposal Losing Momentum
Investors reacted swiftly after initial optimism over Donald Trump’s proposed digital asset reserve gave way to skepticism. Analysts at 10X Research cautioned that the market may have jumped the gun, seeing the rally as an opportunity for short-term profit-taking rather than a lasting shift.
On Tuesday, the broader digital asset market saw a steep decline, erasing gains fueled by Trump’s weekend remarks about a U.S. reserve backed by digital assets. Excitement turned into hesitation as traders questioned how realistic the plan was and whether it would pass legislative hurdles.
The total market cap tumbled 12.3% to $2.85 trillion, with Bitcoin sliding 9.8% to $83,695, Ether plummeting 14.8% to $2,082, and XRP sinking 17.5% to $2.30. Solana and Cardano saw even sharper losses, both down over 20%.
The downturn triggered more than $1 billion in liquidations over the past day, impacting over 311,000 traders, according to data from CoinGlass. Bitcoin accounted for nearly $400 million of that, while Ethereum saw over $209 million in forced liquidations. Among alternative assets, Solana recorded $70 million in losses, with XRP and Cardano following close behind.
Uncertainty Clouds Trump’s Reserve Idea as Timeline Remains Murky
Trump had set the stage for a national reserve earlier this year, but it wasn’t until Sunday that he outlined specific assets involved—Bitcoin, Ether, XRP, Solana, and Cardano. While Bitcoin and Ether were positioned as core holdings, the inclusion of other assets raised concerns about the legitimacy and stability of the proposal.
The initial market reaction was bullish, with Bitcoin surging 20% from its November lows. However, doubts over regulatory approval, legislative roadblocks, and the feasibility of execution soon led to a rapid reversal. Analysts at 10X Research believe the market overreacted and noted that any official directive on the reserve is still months away, making it a prime opportunity for traders to lock in profits rather than chase momentum.
Industry Leaders Call Trump’s Plan Risky and Misguided
Skepticism is mounting among high-profile investors and industry veterans.
Anthony Pompliano, founder of Professional Capital Management, criticized the plan in a client note, despite holding significant investments in some of the mentioned assets.
“A wide-ranging digital asset reserve is a misstep that will be regretted,”
he wrote, arguing that such a move could benefit insiders at the expense of taxpayers.
Cameron and Tyler Winklevoss, co-founders of Gemini, expressed similar reservations. In posts on X, they emphasized that only Bitcoin qualifies as a legitimate reserve asset, questioning the inclusion of other assets.
Meanwhile, longtime Bitcoin skeptic Peter Schiff went even further, calling Trump’s announcement
“The biggest digital asset rug pull of all time.”
He urged Congress to investigate whether members of Trump’s inner circle profited from the market swings and accused the administration of market manipulation, demanding full transparency on internal discussions leading up to the announcement.
Disclaimer: This content does not constitute trading or investment recommendations. It’s essential to conduct your own research before purchasing any cryptocurrency or investing in any services.
