Trump Announces Strategic Crypto Reserve

Trump’s announcement of a strategic crypto reserve, along with a reduction in leverage from February liquidations, may lead to a more sustainable rally in top altcoins, particularly in ADA.

Details of the Announcement

On Sunday, President Trump revealed the formation of a crypto reserve, including Ripple (XRP), Solana (SOL), and Cardano (ADA) in the initial selection, later adding Bitcoin (BTC) and Ethereum (ETH). Research from Kaiko indicates that this inclusion of select altcoins into the U.S. strategic reserve could accelerate capital rotation in the altcoin market. Currently, the top 10 altcoins represent 77% of altcoin trading volume on U.S. platforms, up from 58% last year.

Impact on Altcoin Market

The increased concentration of capital in altcoins is likely to drive prices significantly higher. Altcoins are generally less liquid than Bitcoin, meaning small changes in supply and demand have a bigger impact. Notably, ADA might experience substantial price movements as it lags behind other assets included in the strategic reserve.

Market Reactions

Signs of this trend are already visible. After the reserve announcement, market volatility increased, especially for altcoins. Within 24 hours, intraday volatility surged beyond 600% for ADA. This token has also received the strongest capital inflows since the announcement, with open interest rising 10% year-to-date to $554 million.

Conclusion

Kaiko’s analysis indicates that February’s downturn led to waves of liquidations, resulting in reduced leverage across the top ten altcoins. As a result, while capital inflow into these coins is likely to raise their prices, the reduction in leverage suggests that the upcoming price increases may be less volatile and more sustainable.