Bitcoin Drops to $79,500 After Trump’s Crypto Reserve Announcement

Bitcoin (BTC) suffered a 4.2% drop on Monday, settling around $79,500, contributing to a 12% decline over the past week. The downturn followed President Donald Trump’s announcement regarding a U.S. strategic crypto reserve, which confirmed that the government would not be purchasing additional Bitcoin, instead relying only on BTC obtained through asset forfeitures.

The broader crypto market also declined, with Ethereum (ETH) and XRP each dropping by about 3%.

What Triggered the Bitcoin Decline?

1. Trump’s Crypto Reserve Clarification

Last week, Trump’s announcement of a strategic Bitcoin reserve initially fueled optimism, with some traders speculating that the U.S. might begin accumulating Bitcoin as part of its national holdings.

However, on Monday, March 11, 2025, the administration clarified that no new BTC purchases would take place. Instead, the reserve would consist of Bitcoin already held by the government due to seizures from criminal cases and asset forfeitures (such as BTC recovered from darknet operations like Silk Road).

This dampened hopes of sustained institutional buying pressure from the U.S. government, contributing to the price drop.

2. Market-Wide Weakness

Bitcoin’s decline was part of a broader crypto market downturn:

• Ethereum (ETH): Dropped 3%, trading around $1,980–$2,020.
• XRP: Fell 3%, dipping below $0.57.
• Total Crypto Market Cap: Decreased $150 billion in the past week.

Some analysts suggest that profit-taking and macroeconomic uncertainty have contributed to the weakness.

3. Declining Institutional Inflows

Recent data shows that institutional investment in Bitcoin ETFs has slowed after record inflows earlier this year.

• Bitcoin ETFs saw net outflows of $320 million over the past five days, per Bloomberg data.
• This follows a period of heavy inflows earlier in Q1 2025, when BTC briefly traded near $100,000.

The lack of sustained institutional demand has weakened market sentiment.

Will Bitcoin Recover?

Despite the short-term correction, some analysts remain bullish on Bitcoin’s long-term trajectory:

✅ Key Support Levels:

• Bitcoin is currently testing the $79,000–$80,000 support range. If this level holds, a bounce toward $82,500–$85,000 is possible.
• However, if BTC drops below $78,000, it could test $75,000 next.

✅ Halving Narrative:

• The Bitcoin halving event in April 2025 is historically a bullish catalyst, reducing BTC’s supply issuance.

✅ Regulatory Uncertainty Clearing Up:

• Trump’s administration has been more crypto-friendly than previous policies, with SEC enforcement slowing down.

Potential Risks:

⚠️ Further Selling Pressure: If Bitcoin drops below $78,000, it could trigger liquidations of leveraged long positions.
⚠️ Macroeconomic Uncertainty: Fed rate policies and global financial conditions may influence Bitcoin’s recovery.

Final Thoughts: Short-Term Weakness, Long-Term Strength?

Bitcoin’s 4.2% drop to $79,500 reflects a broader market cooldown, particularly after Trump’s crypto reserve clarification dampened speculation of government-led BTC accumulation.

While near-term volatility remains, Bitcoin’s long-term fundamentals—such as the upcoming halving and increasing institutional adoption—could support a recovery later in 2025.

For now, traders are watching key support at $79,000, with resistance near $85,000 if momentum picks up.

Will Bitcoin rebound, or is this the start of a deeper correction? Let’s see how the market reacts in the coming days.