“Why Trump’s Strategic Crypto Reserve is Just Another Scam”

Author: James Thomson

Source: Bloomberg PLC

Six weeks after Donald Trump’s unflattering spectacle of promoting a meme coin created in his honor—only for it to crash within hours—the U.S. president is once again reaching out to the crypto community that helped him gain power. The American government may be drowning in debt and desperately trying to cut spending, yet it still wants to use taxpayer money to buy cryptocurrencies.

Trump came to power with a promise to establish a strategic crypto reserve, but the idea seemed to have been put on the back burner—until Sunday night. Suddenly, Trump revived the initiative, announcing that the reserve would contain Bitcoin, Ethereum, and other more controversial cryptocurrencies, including Solana, ADA, and XRP. Trump’s support for the crypto market comes at a critical moment for the sector.

“I will make sure the U.S. becomes the crypto capital of the world,” he wrote on Truth Social. “We are making America great again!”

The news was welcomed by the crypto community, which found some relief after a tough few weeks. Although Bitcoin surged over 55% to a record high of $106,500 following Trump’s victory, it dropped more than 20% after market sentiment was shaken by Trump’s meme coin scandal, a $1.5 billion hack of a major crypto exchange, and the lack of progress in the president’s crypto policies.

Trump’s social media post led to a 10% surge in Bitcoin within hours, while ADA skyrocketed by an impressive 60%. Great news for crypto investors—but the rest of the world should be concerned about yet another case of financial speculation by Trump. Of course, his top supporters will benefit.

For example, Trump’s crypto advisor, David Sacks, remains a partner at venture capital firm Craft Ventures, which is an investor in a fund called Bitwise. On Sunday, a Bitwise executive enthusiastically announced on social media that the fund’s five largest holdings are the same cryptocurrencies Trump designated as core to the crypto reserve.

What Do Taxpayers Gain from This?

What is the strategic benefit of the U.S. government owning cryptocurrencies? The idea that Bitcoin can act as a hedge against inflation remains highly debated, while tokens like Solana, XRP, and ADA are little more than experimental digital projects.

As renowned skeptical investor Jeremy Grantham stated in a weekend podcast:

“None of these assets produce anything, nor are they tangible means of payment, but they are fantastic speculative opportunities.”

Of course, investors have every right to buy cryptocurrencies for any purpose—from wealth creation to hedging, diversification, and pure speculation. But when the government buys cryptocurrencies, there is a risk of wealth transfer from American taxpayers to a small group of active holders—including major supporters of the president.

And for What?

• To reduce national debt? That would only work if cryptocurrency prices rise.
• To hedge against economic uncertainty? That is only possible if crypto assets do not move in the same direction as other risky assets.
• To prepare for a future crisis? This is not a strategic reserve of oil or grain—it is an asset with no intrinsic value.

The most remarkable aspect of Trump’s move is that even crypto enthusiasts are criticizing it. Australian businessman and crypto investor Mark Carnegie condemned the decision on social media, calling it “devastating for the integrity of the world’s superpower.”

It is suggested that the crypto reserve could be funded with $18 billion in crypto assets confiscated by U.S. law enforcement. However, given that Trump’s administration is so determined to cut government spending, it could probably find a better use for those funds.