The cryptocurrency market experienced significant volatility following contradictory statements from U.S. Treasury Secretary Scott Bessent regarding the acquisition of Bitcoin for a strategic reserve. Initially, Bessent confirmed that the U.S. would not be purchasing crypto for its reserve, a declaration that triggered a sharp collapse in Bitcoin's price on Thursday. The leading cryptocurrency plunged to an intraday low of $117,719 on the Bitstamp exchange and struggled to recover, hovering around $118,544. This decline occurred on the same day Bitcoin had reached a new all-time high of $124,517, marking a nearly 4% drop.

The market reaction extended beyond Bitcoin, with altcoins also taking a substantial hit; XRP, for instance, plummeted 7% within minutes, briefly dipping below the $3 level. Data from CoinGlass revealed that over $1 billion worth of crypto was liquidated within 24 hours, with long positions accounting for the overwhelming majority of this wipeout at $778 million.

Bessent's initial stance was that the U.S. would cease selling existing confiscated coins, a policy in place since the cryptocurrency reserve's establishment in March. However, he had explicitly ruled out new Bitcoin purchases, despite previously hinting at avenues for acquiring more. This contributed to a drastic decline in confidence regarding a U.S. strategic Bitcoin reserve, with Polymarket, a prominent crypto-based betting platform, seeing the odds of such a reserve being established in 2025 collapse to a new all-time low of just 16%.

However, Bessent later walked back his earlier comments, indicating that the U.S. might, in fact, buy more Bitcoin. A subsequent social media post, which puzzled some members of the cryptocurrency community, clarified that the U.S. Treasury is committed to finding "budget-neutral" pathways for acquiring additional coins, echoing remarks he made in March. Bloomberg had previously estimated a 30% chance of the U.S. purchasing Bitcoin in 2025, with potential funding sources including the Exchange Stabilization Fund (ESF).

Despite the market turbulence, Bitcoin was trading at approximately $118,156 after Bessent's most recent statement. Michael Saylor, the executive chairman of Strategy (formerly MicroStrategy), remained unfazed by the recent correction, asserting in a social media post that "volatility is the gift to the faithful."

Regarding existing holdings, Bessent clarified that the government's confiscated coins currently amount to up to $20 billion, positioning the U.S. as the largest holder of top cryptocurrencies globally. According to BitTBO data, China and the U.K. are also among the top three holders. Notably, U.Today reported that China is considering selling its vast Bitcoin holdings, a move that could help the current Labour Party government address a budget deficit.