Altcoins shined as Trumps crypto reserve triggered market surge
Trumps announcement of a strategic crypto reserve on Mar. 2 ignited a swift and widespread rally that reversed the recent dip in sentiment following Bitcoins drop below $80,000 last week. While Bitcoin and Ethereum were widely assumed to be the reserves central components, the initial announcement only mentioned XRP, Solana, and Cardano.
The markets response was immediate and enthusiastic. Investors interpreted the move as a signal of governmental endorsement, driving a price surge across the market. The announcements effects were significant, with the entire market seeing a robust uplift following the news. Bitcoin climbed 7.13% to $91,906, reclaiming much of its lost value from the prior weeks decline. Ethereum mirrored this recovery with a 7.08% increase to $2,367.87.
While these gains are significant, they pale compared to the explosive movements observed in altcoins. XRP, ranked third by market cap at $153.020 billion, surged by an impressive 16.77% to $2.64058, a jump that outpaced both Bitcoin and Ethereum despite no official confirmation of its inclusion in the reserve.
Solana, sixth in market cap at $81.606 billion, posted a 12.42% rise to $160.752, further highlighting a trend of disproportionate gains among high-profile altcoins. Perhaps most striking was Cardano, which, despite a subsequent 7.02% drop to $0.87243 in the latest 24-hour snapshot, had achieved a staggering 47.02% increase within a day, according to data from CryptoSlate.
Smaller-cap altcoins saw a disproportionally better performance in the past 24 hours. Dogwifhat (WIF), ranked 85th with a market cap of $768.599 million, soared by 20.88% to $0.76945, while Onyxcoin (XCN), at position 100 with a market cap of $613.199 million, gained 21.42% to reach $0.01881. Other notable performers included Cronos (CRO) with a 16.68% increase, MultiverseX (EGLD) at 14.28%, and Story (STY) at 19.22%, reflecting a broad-based rally that extended well beyond the top tier.
These outsized gains, particularly among coins not explicitly tied to the strategic reserve, suggest a speculative frenzy fueled by market-wide optimism rather than a direct correlation to the reserves composition.
For coins like XRP and Solana, the higher-than-average increases could stem from their potential inclusion in the reserve and relatively established roles in the DeFi ecosystem. However, Cardanos dramatic spike and subsequent pullback point to a volatile mix of retail hype and profit-taking.
Beyond individual price movements, the announcement led to a notable uptick in the total value locked (TVL) across DeFi protocols, which rose from $97.228 billion on Mar. 2 to $103.381 billion on Mar. 3, a $6.153 billion increase over 24 hours.
This 6.3% growth signals heightened investor activity in DeFi. The timing aligns with the price rally, suggesting that capital flowed into DeFi platforms alongside the spot market surge, possibly as investors sought to capitalize on yield opportunities amid the bullish sentiment.
However, its important to note that this entire increase cant be attributed solely to the reserve announcement. Fluctuations in DeFi TVL can often be seasonal or reflect various new protocol incentives. The $6 billion jump is substantial, yet it represents a modest increment relative to the trillions in total crypto market cap, indicating that while confidence grew, the DeFi sectors response was measured rather than transformative.
Since US equity markets opened Bitcoin has pulled back 5.8% as of press time. US spot Bitcoin ETF traders are seemingly using the jump to sell at higher prices than the markets Friday close of $85,000, with Bitcoin beginning pre-market trading at $94,700. The broader market has followed Bitcoins lead in the retracement.
For the market as a whole, the announcement carries significant implications, both immediate and prospective. This upswing hints at a potential turning point, where governmental acknowledgment could accelerate institutional adoption, drawing parallels to how strategic reserves in traditional markets signal long-term commitment.
However, the absence of specificshow much will be reserved, which coins beyond Bitcoin and Ethereum are included, and how the reserve will be funded or managedcasts doubt on its feasibility. The crypto markets global, decentralized nature complicates unilateral governmental influence, and without a robust framework, the reserve risks being a hollow promise, temporarily lifting prices.
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Text source: CryptoSlate
