On March 7, 2025, crypto investor and Wolf of All Streets podcast host Scott Melker dedicated a significant portion of his Wolf Den newsletter to analyzing the launch of the U.S. Strategic Bitcoin Reserve (SBR) and the market’s reaction. Later that day, he expanded on his insights via his X account, breaking down why Bitcoin’s price dropped and why this move is still a long-term victory for the cryptocurrency.
The U.S. Strategic Bitcoin Reserve Creation
The idea of a Bitcoin stockpile first emerged in the summer of 2024, when former President Donald Trump announced his support for such an initiative during the Nashville Bitcoin Conference. Around the same time, Sen. Cynthia Lummis introduced a bill suggesting the U.S. should accumulate one million bitcoins over five years.
Expectations soared, with many in the crypto space believing Trump would sign the reserve order immediately upon returning to office. However, Bitcoin was notably absent from his inauguration speech. Instead, he fulfilled his campaign promise to pardon Ross Ulbricht of Silk Road fame. The Bitcoin reserve plan was later confirmed, with Sen. Lummis appointed chair of the Senate Banking Subcommittee on Digital Assets.
On March 6, Trump officially signed the executive order to establish the Strategic Bitcoin Reserve. However, it differed from Lummis’ proposal, aligning more closely with Trump’s original vision of a government-held Bitcoin stockpile composed entirely of seized assets. Unlike initial expectations, taxpayer money would not be used to acquire Bitcoin. The reserve will grow through seizures, forfeitures, and potentially other budget-neutral strategies.
Michael Saylor, a longtime Bitcoin advocate, hinted at alternative acquisition strategies, stating:
“I have a few budget-neutral strategies for acquiring additional bitcoin…”
Currently, the U.S. government holds approximately 200,000 bitcoins, though an audit is underway to determine the exact number. Simultaneously, the government launched the Digital Assets Stockpile, which will hold ETH, ADA, SOL, and XRP. However, controversy arose over White House crypto czar David Sacks, with some alleging he may indirectly profit from the reserve’s formation—claims Sacks denies.
The Price Drop Explained
Following the announcement, Bitcoin’s price dropped by $5,000—a surprising reaction, given that many expected the SBR launch to be a bullish catalyst. Scott Melker weighed in, explaining that the decline stemmed from disappointment among traders who had anticipated immediate large-scale Bitcoin purchases.
“The reaction to the Strategic Bitcoin Reserve makes one thing clear: Most people who claim to be in Bitcoin for the fundamentals really just care about number go up.”
Melker emphasized that the long-term implications are far more important than the short-term price movement. By officially recognizing Bitcoin as a strategic asset, the U.S. has set a precedent that other nations will likely follow. He highlighted that America would not accept being second to China in the Bitcoin race, potentially fueling a global competition for Bitcoin reserves.
“While some critics argue this doesn’t immediately impact the market because the government isn’t actively buying Bitcoin yet, they’re missing the long-term significance. The U.S. just signaled that Bitcoin is here to stay as a key financial asset, and history tells us that when America sets the standard, the rest of the world follows.”
Melker also pointed out another key reason for the price drop: Bitcoin’s market liquidity. When major news breaks in an illiquid market, leveraged positions tend to be wiped out, leading to short-term dips. However, he reassured investors that bigger players would step in, pushing prices higher in the long run.
Other Reactions
The launch of the Strategic Bitcoin Reserve sparked a heated debate across the crypto community. Many were frustrated that the government would not use taxpayer funds to purchase Bitcoin outright, arguing that there was little difference between the SBR and previous holdings of seized BTC by the U.S. Marshals.
Melker pushed back against this narrative:
“If you think that the Bitcoin SBR is bad news because it will only contain seized bitcoin, then you are bad at reading and worse at comprehending what you are reading. Sell me your Bitcoin.”
Some critics, including Jeff Park of Bitwise Invest, dismissed the move entirely, calling it a pump-and-dump event that ultimately led to market disappointment. He argued that regulatory clarity and crypto tax policies were far more pressing issues.
“I’m honestly just glad we can get this pump and dump chapter finally over with and move on to the things that actually matter.”
However, many Bitcoin bulls celebrated the executive order as a historic milestone. Sen. Cynthia Lummis, despite her own proposal being sidelined, voiced her support while raising concerns about the lack of congressional oversight for the SBR. Meanwhile, Bitcoin enthusiasts like Bitcoin Therapist described the order as “the most bullish news [he has] seen in the past four years.”
“THE UNITED STATES IS GOING TO BUY BITCOIN. THIS IS A FACT. READ THE FINE PRINT.”
Despite the initial market turbulence, the establishment of the Strategic Bitcoin Reserve marks a significant moment in Bitcoin’s history. The U.S. government’s official recognition of Bitcoin as a strategic asset validates its long-term potential and could ignite a global race for national BTC reserves. While traders may have been disappointed by the lack of immediate buying pressure, the long-term implications suggest that Bitcoin’s role in global finance is only beginning to take shape.
With this move, the U.S. has crossed the Rubicon. The world will be watching to see what happens next.
