TLDR

Bitcoin fell below $119,000 after the US Treasury Secretary said there would be no new Bitcoin purchases for the reserve.
The cryptocurrency dropped from an all-time high of $124,457 earlier in the day to $118,730 within hours.
US Treasury Secretary Scott Bessent confirmed that existing Bitcoin holdings will be kept, but no additional acquisitions will be made.
The US national debt reached $37 trillion, which could influence Bitcoin demand as a hedge against inflation.
The policy shift ended speculation that the US Treasury would expand its strategic Bitcoin reserve using alternative funding sources.

Bitcoin dropped sharply on Thursday after the US Treasury Secretary ruled out new purchases for the national Bitcoin reserve. The cryptocurrency fell below the $120,000 support level within hours of hitting an all-time high earlier in the day. Market sentiment shifted quickly following remarks that confirmed no additional acquisitions would be made.

US Treasury Statement Impacts Market

US Treasury Secretary Scott Bessent told Fox Business the government had no plans to buy more Bitcoin. “We’re not going to be buying that,” Bessent said, noting they would use confiscated assets to build reserves. His statement came after the administration had promoted a strategic Bitcoin reserve earlier this year.

The US Treasury emphasized it would maintain current holdings but stop selling seized Bitcoin. This marked a policy change from earlier practices of liquidating confiscated coins in auctions. Bessent said the reserve’s value stood between $15 billion and $20 billion at current prices.

President Donald Trump had signed an executive order in March creating a strategic Bitcoin reserve and a separate digital asset stockpile. Both reserves would initially use cryptocurrency seized in criminal cases. The US Treasury’s decision not to expand acquisitions dampened optimism built over recent policy signals.

Policy Shift on Bitcoin Reserves

In March, Bessent supported halting the sale of seized Bitcoin and adding it to the national reserve. He argued that keeping Bitcoin onshore would strengthen the US position in the global cryptocurrency market. The US Treasury adopted this stance while maintaining regulatory oversight of digital assets.

White House AI and crypto adviser David Sacks described the reserve as “a digital Fort Knox for cryptocurrency.” He said coins placed in the reserve would serve as a store of value. The US Treasury’s refusal to expand purchases tempered earlier enthusiasm from administration officials.

In April, adviser Bo Hines said the government explored funding Bitcoin acquisitions through tariff revenues and gold certificate reevaluations. These proposals fueled speculation about significant expansion of the reserve. However, the US Treasury’s latest position effectively halted those expectations.

Market Reaction and Economic Context

Bitcoin price traded at $118,730 after the announcement, falling from the day’s record of $124,457. The drop came hours after Bitcoin briefly surpassed Google’s market capitalization. The US Treasury’s stance ended a rally driven by expectations of government-backed demand.

Meanwhile, the US national debt reached $37 trillion this week. Rising debt has led some analysts to highlight Bitcoin’s appeal as a hedge against inflation. The US Treasury decision leaves market participants assessing private sector demand for further price growth.

The post From Record High to Rapid Fall: US Treasury Shocks Bitcoin Market appeared first on Blockonomi.

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Filed under: Bitcoin - @ August 14, 2025 8:21 pm