How Trump's Crypto Reserve Fund Plan Impacts the Crypto Market?
The cryptocurrency market suffered a major blow on March 4, losing $800 million in value as prices fell. After briefly surpassing the $3 trillion mark, the total market capitalization fell 9% to $2.77 trillion, with trading volume down 14% to $177 billion. Bitcoin, Ethereum, and XRP initially surged after Donald Trump announced plans for a U.S. cryptocurrency reserve fund, but the excitement quickly died down.
New tariffs imposed on Mexico and Canada added further pressure, causing a market-wide sell-off and showing how sensitive cryptocurrencies remain to economic changes.
Whales Move Large Amounts of Crypto to Exchanges
As the market turned bearish, large cryptocurrency holders – known as whales – began moving large amounts of their assets to exchanges. This came shortly after Trump revealed plans to include more crypto assets in the reserve initiative.
According to CryptoQuant, XRP inflows spiked to 193 million tokens per hour, with most transactions involving more than 1 million XRP. Bitcoin inflows spiked from the usual 500-1,000 BTC per hour to a whopping 6,739 BTC. Ethereum followed suit, with nearly 300,000 ETH sent to exchanges in just one hour.
Selling pressure increases
When large institutions or investors move money into exchanges, it often signals selling pressure. Most long-term investors store their holdings in cold wallets, so large transfers to exchanges often precede sell-offs. The sudden surge in inflows coincided with price volatility across the market, suggesting traders took advantage of the Trump-fueled rally to cash out.
Despite the short-term price spike, actual buying demand remains weak, CryptoQuant analysts point out. Bitcoin’s “apparent demand” — a key metric that tracks the balance between newly mined coins and existing supply — has been falling since late 2024. This has now pushed demand into contraction for the first time since September 2024, raising concerns about Bitcoin’s ability to sustain future price increases.
Retail investors remain hesitant
Retail accumulation has also slowed since November, further reducing buying pressure. Without new capital entering the market, it will be difficult for crypto prices to maintain their upward momentum.
Trump’s support for cryptocurrencies has fueled speculation about new regulations and institutional investment, but the market reaction suggests traders remain uncertain. Without increased demand, prices may struggle to hold steady, even amid rumors of a U.S. crypto reserve plan.
Investors are now watching to see whether the move leads to long-term growth or just leads to more price volatility.