Trump attempts to bail out his wealthy cryptocurrency backers with 'U.S. crypto reserve'

Just a few days ago, Mashable published an article investigating why Bitcoin and other cryptocurrencies were suddenly in a freefall. Of the four main reasons, three were attributable to Donald Trump and his actions as president. 

This is not exactly what one would expect from Trump, who promised to be a pro-crypto president after its advocates helped him win the presidency.

But over the weekend, as Bitcoin lost roughly one-fifth of its value, Trump suddenly made an announcement that temporarily sent cryptocurrencies' values skyrocketing once again.

On his social media platform Truth Social, Trump announced that the U.S. government would create a "Crypto Strategic Reserve" and begin buying various cryptocurrencies. Trump specifically mentioned five: Bitcoin, Ethereum, XRP, Solana, and Cardano.

"A U.S. Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration, which is why my Executive Order on Digital Assets directed the Presidential Working Group to move forward on a Crypto Strategic Reserve that includes XRP, SOL, and ADA," posted Trump. "I will make sure the U.S. is the Crypto Capital of the World. We are MAKING AMERICA GREAT AGAIN!"

Crypto immediately went up across the market. Bitcoin, for example, shot up from the $85,000 range to the $95,000 range, ending a seemingly downward spiral that the crypto market was experiencing. 

However, critics immediately called out Trump and his administration for the move. For one, it seemed like a bizarre strategy for an administration spearheading a cost-cutting initiative led by Elon Musk to use taxpayer dollars to buy up cryptocurrencies. 

"Nobody announced a tax or a spending program," White House AI and crypto czar David Sacks said to those critics. "Maybe you should wait to find out what’s actually being proposed."

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Sacks, a Silicon Valley venture capitalist, never shared precisely what was being proposed as a followup.

While most have likely heard of Bitcoin and Ethereum, the other three cryptocurrencies mentioned by the president serve very niche crypto audiences. Solana is probably best known as the platform on which many meme coins are built. For example, Trump's controversial meme coin is traded on the Solana blockchain. Some crypto advocates even criticized Trump's inclusion of XRP and ADA due to concerns regarding centralization and the lack of stablecoin issuers.

But speaking of Sacks, a big spotlight was also put on him and his seemingly coincidental connection to the five specific cryptocurrencies that Trump wants the U.S. government to buy.

Sacks was an early investor in Solana and, as a result, had a significant amount of Solana crypto holdings. Sacks claims he has since sold off all of his crypto holdings. However, Sacks has yet to speak to his venture capital firm Craft Ventures and its connection to the five specific cryptocurrencies.

Craft Ventures invests in crypto companies such as Bitwise, a crypto asset manager with significant crypto holdings. Its top five cryptocurrency holdings? Bitcoin, Ethereum, XRP, Solana, and Cardano.

We'll have to wait and see exactly what Trump and Sacks have planned to fully look into the ramifications here, but so far, it's not looking good.

As for Trump's attempt to help the crypto markets, the bounce appears to have been only temporary. As of publication, most cryptocurrencies have dropped back to their trading levels before Trump's announcement.