US Treasury’s Decision on Bitcoin Purchases Rocks the Cryptocurrency Market
The cryptocurrency landscape has been jolted following a statement by US Treasury Secretary Scott Bessent. In a surprising move, the government has announced that it does not intend to acquire additional Bitcoin for its Strategic Reserve. This decision has reverberated through the market, causing significant price fluctuations and raising questions about the future of digital assets in the United States.
US Government’s Strategic Bitcoin Reserve Plans
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During an interview with Fox Business, Secretary Bessent addressed the government’s approach to the Strategic Bitcoin Reserve. He confirmed that no further Bitcoin purchases would be made. Instead, the plan is to bolster the reserve using assets that have been confiscated. At current market valuations, these assets are estimated to be worth between $15 to $20 billion. Additionally, Bessent revealed that the government will cease selling its existing Bitcoin holdings.
Market Reaction and Price Fluctuations
The market’s response to this announcement has been notably negative, with Bitcoin’s value plummeting to around $118,000. This volatility followed an already tumultuous period, where Bitcoin first reached a new all-time high of over $124,000 before experiencing a rapid decline. The Treasury’s decision has only added to the existing market chaos.
Derivatives Market Impact
The recent turbulence in the cryptocurrency market has led to substantial liquidations among derivatives traders. According to data from CoinGlass, liquidations over the past 24 hours have reached nearly $1 billion. As Bitcoin and other digital assets have depreciated, traders holding long positions have borne the brunt, with $747 million in positions forcibly closed.
Ethereum and Altcoins Under Pressure
Ethereum-related contracts have been particularly impacted, with liquidations amounting to $312 million. Bitcoin follows with $214 million in contracts being liquidated. Other altcoins such as Solana (SOL) and XRP (XRP) have also experienced significant liquidations, amounting to $66 million and $56 million, respectively.
US Crypto Policy and Future Prospects
Despite the Treasury’s current stance on Bitcoin, former President Donald Trump has been proactive in positioning the United States as a leader in the cryptocurrency space. The President’s Working Group on Financial Markets has released a Digital Assets Report, offering recommendations for shaping cryptocurrency policy. Federal agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are actively working towards realizing this vision through initiatives such as Project Crypto and Crypto Sprint.
Bitcoin’s Current Market Status
As of this writing, Bitcoin is valued at approximately $118,200, reflecting a decline of over 2% in the past day. This recent downturn is part of a broader trend of price volatility that has characterized Bitcoin’s performance in recent days.
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