Many cryptocurrencies skyrocketed over the weekend. Industry giant Bitcoin (BTC +1.02%) gained 13% from Friday's market close to 9:15 a.m. ET on Monday. Smart contracts veteran Ethereum (ETH +1.80%) posted a 15.4% gain over the same period.
The crypto market never sleeps, being open for trading at all hours, every day, but you can double-check the leading coins' moves against their more traditional exchange-traded funds (ETFs). The iShares Bitcoin Trust (IBIT +0.02%) topped out at a 10.7% gain on Monday and the iShares Ethereum Trust (ETHA +0.00%) stopped at a 7% maximal gain.
They all backed down from these double-digit price increases. As of 11:35 a.m. ET, the leading Bitcoin ETF is up by 6.7% while its Ethereum-based cousin shows a 2.7% weekend return.
These jumps were inspired by potentially positive news from the White House. In a flurry of social media posts on Sunday, President Donald Trump doubled down on his promise to create a strategic reserve of cryptocurrencies, holding coins of Ethereum, Bitcoin, and at least three other cryptos.
CRYPTO: BTC
Key Data Points
What's going on in the crypto market right now
This isn't a new idea for Ethereum and Bitcoin investors, who have seen the Trump administration explore the strategic reserve idea since last year's campaign. However, things are getting more concrete and it's always good to see new details on how this plan is supposed to work.
To that end, Trump foreshadowed the declaration of a new executive order designed to set up a gold-like reserve of cryptocurrency assets. The working group for digital assets that he launched in January will be directed to "move forward" with the design and implementation of a digital currency reserve.
The posts came at a stressful time in the crypto sector. After Monday morning's price jumps, Bitcoin is not quite back where it was a week ago. Ethereum prices dropped 11% lower over the same period.
Digital asset investors backed down from their Ethereum and Bitcoin commitments last week for two reasons:
- Trump's trade tariffs started to kick in, adding uncertainty to the global economy. That's bad news for crypto, amplifying the hazards of investing in an already high-risk asset class.
- At the same time, a hacker group stole $1.4 billion of Ethereum from a well-respected crypto brokerage. The hack didn't expose any flaws in Ethereum itself, as it relied on sophisticated social engineering attacks on a cloud-based digital wallet service. Still, billion-dollar heists are sure to rattle investor nerves in any sector, and especially in the volatile cryptocurrency market.
So crypto investors were happy to see some good news after a slew of negative developments. Trump's crypto-friendly posts were seen as a welcome reminder that good things are supposed to happen in the near future.
CRYPTO: ETH
Key Data Points
How big is this government-backed idea, anyway?
Trump and his digital asset working group haven't set any firm targets for their strategic reserve yet. Let's compare this idea to the existing strategic gold reserve.
The Treasury holds about $682 billion of physical gold reserves in a global gold market worth roughly $15 trillion. That works out to approximately 4.5% of all the gold in the world.
Buying 4.5% of the total cryptocurrency market would be a $132 billion investment today, with a full market value of $2.97 trillion. It would be a significant stake, but it pales next to the potential of institutional investors setting up positions in Bitcoin or Ethereum. That's a $70 trillion global market with a much heavier American presence.
If these financial heavyweights follow the recommendation of sector leader Blackrock (BLK +1.91%), which recently suggested funneling as much as 2% of its portfolio recommendations into crypto, that would be more than a trillion-dollar market boost.
So crypto investors are still looking for details on what the proposed strategic crypto reserve might look like, and it may not be the biggest game changer of all. Still, crypto investors were ready to embrace any good news with open arms, and Trump's social media posts pushed all the right buttons.
