Bitcoin erases gains as crypto reserve hype fades

Bitcoin price surged from $86,000 to $94,800 over the weekend on Trump’s plans to establish a national crypto reserve but pared gains on Monday, dropping back to $86,000. If BTC price declines, support can be found at $78,000, while resistance may be encountered at $99,300. 

Ethereum price similarly surged from $2,220 to $2,550 over the weekend, but erased all gains on Monday, plummeting to $2,140. If Ethereum price declines, it may encounter support near $2,070, while if it increases, it may encounter resistance near $2,600.

Bitcoin price registered a new all-time high of $109,880 in January but has since been under pressure by increased risk aversion sentiment. Bitcoin price fell hard last week, losing more than 22% of its value from its 2025 peak.

The US government is expected to adopt a pro-crypto regulatory and fiscal policy boosting cryptocurrency prices. More importantly, US President Donald Trump has often mentioned plans of building a Bitcoin strategic reserve. Over the weekend, Trump reaffirmed on his social media that he plans to establish a national cryptocurrency reserve. Trump announced that he will establish a national crypto reserve composed of multiple cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Cardano (ADA), and Solana (SOL). Trump’s announcement created a crypto market hype that boosted most major cryptocurrencies and especially those mentioned specifically in Trump’s announcement. On Monday, however, the hype created over Trump’s announcement faded and Bitcoin and other major cryptocurrencies plummeted on profit taking.

Most major cryptocurrencies are under pressure on concerns that US President Donald Trump’s trade policies may start global trading wars. Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. The uncertainty over Trump’s future policies and trade tariffs is generating a risk aversion sentiment, putting pressure on crypto markets. 

Trump has threatened that he will announce reciprocal tariffs on many countries, which would raise US import taxes to match those imposed by the country’s other trading partners. If Trump goes through with these heavy tariffs, global inflation is likely to rise and economic outlook will worsen, putting pressure on crypto markets.  

US President Donald Trump’s plans to broker a peace treaty between Russia and Ukraine have so far been fruitless. On Friday, Trump had a heated meeting with Ukrainian President Volodymyr Zelenskyy in the White House. The clash confirmed that a peace treaty is not yet on the horizon, putting pressure on risk assets. On Sunday, however, European leaders gathered to discuss the situation in Ukraine. British Prime Minister Keir Starmer stated that European leaders have agreed to draft a peace proposal between Russia and Ukraine and send it to Washington.

Cryptocurrency prices are also affected by central banks’ interest rates. High interest rates stifle economic growth, putting pressure on crypto markets. The US Federal Reserve held interest rates steady at its January meeting, after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%.

BTC/USD 1h Chart

ETH/USD 1h Chart

TRADE CRYPTO

The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.

Written by:
Myrsini Giannouli

Share the article: