Tread cautiously amid regulatory uncertainty, high volatility

United States President Donald Trump on March 2, 2025, announced the creation of a US crypto strategic reserve comprising Bitcoin, Ethereum, XRP, Solana, and Cardano.

- SANJAY KUMAR SINGH & KARTHIK JEROME

This move is being seen as a major step towards legitimizing cryptocurrencies and one that could trigger a bull run in this asset class.

Market impact The announcement led to a surge in trading volumes, with the crypto market recording inflows of nearly $300 billion overnight. "Such legitimization of cryptos by the US government could drive mainstream adoption and increase institutional participation," says Balaji Srihari, vice president, CoinSwitch. He believes that establishing a US strategic reserve could spark a global accumulation race.

Bitcoin and Ethereum are expected to maintain dominance due to their first-mover advantage, security, and institutional backing. "The inclusion of XRP, Solana, and Cardano in the US reserve could significantly boost their adoption," says Raj Karkara, chief operating officer, ZebPay.

Sustaining this momentum will depend on policy support, effective execution, market sentiment, and economic conditions.

Several factors currently favor cryptocurrencies. The launch of Bitcoin exchange-traded funds (ETFs) has been a key driver. "US spot Bitcoin ETFs have driven massive institutional inflows," says Karkara.

Traditional financial institutions are embracing digital assets. "BlackRock, the world's largest asset manager, now recommends cryptos as part of its model portfolio to clients," says Srihari.