On the third day of his presidency, Trump finally responded to the issue of a national Bitcoin reserve. On January 23, he signed an executive order aimed at optimizing cryptocurrency regulation and ensuring that the US maintains a global leading position in the digital asset field. To fulfill the commitment to establish a national Bitcoin reserve, Trump instructed the White House cryptocurrency supervisor, the Treasury Secretary, the SEC Chairman, and other relevant department heads to form a special working group to assess the feasibility of establishing a digital asset reserve and develop relevant standards. In addition, the executive order also pointed out that the digital assets in the national reserve can come from assets confiscated in law enforcement actions.
After the executive order was issued, Polymarket predicted that the probability of Trump achieving a national Bitcoin reserve within 100 days increased from 30% to 40%. At the same time, the Bitcoin price quickly soared from $102,500 to $106,000, with an intraday maximum increase of 3.4%. However, unfortunately, all the gains were fully given back within the next 6 hours. The main reason for the lukewarm market reaction is that the establishment of a long-term national Bitcoin reserve mechanism requires a solid legal basis, which means that Congress needs to enact supporting legislation. In addition, the funding source for the national reserve plan involves the government budget and financing, which also requires Congressional approval. As is well known, the decision-making efficiency of the US Congress is relatively low, and the interests of various forces are complex and intertwined, making it almost impossible to reach a consensus in the short term. A typical example is META's global payment system Libra, which ultimately failed in the Congressional debate.
Due to the many challenges in establishing a long-term national Bitcoin reserve mechanism, Trump is inclined to implement a symbolic national reserve plan: transfer the Bitcoin held by the US Marshals Service to a special fund (such as the Exchange Stabilization Fund) or fiscal plan under the Treasury Department, and announce that it will not be sold within a certain period of time in the future. Although the transfer of Bitcoin may involve the fiscal budget, the difficulty of passing this matter in the Republican-controlled Congress is not great.
Previously, the optimistic forecasts of many institutions for Bitcoin's performance in 2025 were mainly based on the assumption of government participation. If Bitcoin can occupy a similar allocation percentage in the US national reserve (5%-7%) and pension funds (1%-2%) as gold, the incremental inflow to the crypto market will reach about $50 billion, which will drive Bitcoin's price to break through $150,000. Now that the expectation of government increase has failed, the upside potential of Bitcoin in 2025 will be greatly discounted, which is the reason why we previously believed that the increase this year may only be 30% to 40% (122,000 USD - 130,000 USD).
Although Trump's crypto policy on January 23 was moderate, the changes in some expressions do reveal new opportunities. For example, expanding the national reserve target from Bitcoin to the entire digital asset field undoubtedly constitutes a major positive for ALTS tokens. Currently, the ALTS tokens most likely to be included in the national reserve are ETH, for the following two reasons: 1) ETH is the second largest cryptocurrency asset (53,900 tokens) held by the US government, and it is very convenient to transfer it to the national reserve, and Ethereum is the second spot ETF traded on the NYSE after Bitcoin, with a sound compliance foundation; 2) the WLFI of the Trump family has recently made multiple purchases of ETH, and the holding ratio of ETH and stETH in their portfolio is as high as 72%, which seems to be an active layout as if they have obtained some kind of positive news in advance.
Recently, the market has launched a campaign to save Ethereum. The founders of well-known projects such as Lido, Curve, and Aave have joined the discussion. Although the views of community members differ, their suggestions have always focused on three aspects. First, Ethereum should strengthen the construction of L1, carry out infrastructure upgrades, and ensure that it can compete with high-performance public chains such as SOL and SUI in terms of cost and efficiency. Secondly, reduce the blood-sucking of L2 on L1, strengthen the binding of L2 and L1, and increase the application scenarios of ETH in L2. Finally, reform the Ethereum Foundation, eliminate inefficient departments, develop attractive incentive mechanisms, change the past "Buddhist" state, and set up a window for external marketing.
Under the pressure of the community, Vitalik, who has been practicing Tai Chi all along, finally expressed his position: he still supports the expansion plan of L2, but will impose a "toll" on L2. In the past, a large number of L2 projects have been enjoying the security guarantee of L1, but have been constantly promoting the de-Ethereumization of L2. For example, they have poached projects on the Ethereum mainnet and reduced the collateral and consumption application scenarios of ETH in L2. The most typical example is that many L2 projects have gradually replaced ETH with governance tokens as the collateral for L2 processing nodes and the position of network GAS, which has greatly weakened the influence of Ethereum in the ecosystem, resulting in Ethereum being constantly bled by a large number of governance tokens worth tens of billions of dollars in valuation. In the era of rapid expansion of L2, ETH is more like a decentralized central clearing bank, and it is completely reasonable to charge channel fees or membership fees from member units for their transactions. In short, rebuilding the synergistic mechanism between L1 and L2 has become the easiest and most effective way to boost Ethereum's fundamentals.
So far, the author still believes that the chances of successfully rescuing Ethereum are very high, as its core competitiveness in decentralization and ecology has not been lost. With the gradual implementation of staked Ethereum ETFs, hybrid ETFs, and national reserves of Ethereum, Ethereum is still expected to usher in a new round of incremental buying.
