The U.S. government’s Strategic Bitcoin Reserve, created last year, has lost about $5 billion in value following the cryptocurrency market’s plunge.
Bitcoin’s price has fallen about 45% since its peak, and the value of its reserves has fallen from $18.5 billion to about $13.8 billion.
The reserve was created during the administration of US President Donald Trump, who was particularly known for his crypto-friendly policies. The administration said Bitcoin assets would continue to be held, arguing that the long-term profit potential outweighs short-term price fluctuations.
But critics say holding volatile digital assets with public funds comes with serious risks. The plunge in Bitcoin reserves has reignited debate over the inclusion of crypto assets on public balance sheets.
Meanwhile, China is increasing pressure on the cryptocurrency market. The People’s Bank of China (PBoC) has prohibited domestic and controlled foreign entities from issuing virtual currencies without approval.
The authorities reiterated that crypto assets are not legal tender and commercial activities in this area are considered illegal. The regulations reportedly target risks such as money laundering, fraud and unauthorized cross-border transfers. Stablecoins and tokenized assets also fall within the scope of regulation.
*This is not investment advice.
