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Democrat lawmaker urges Treasury to cease Trump’s Bitcoin reserve plans
A Democrat lawmaker has called on the US Treasury to “cease all attempts” to create a strategic crypto reserve in the United States, citing conflicts of interest with US President Donald Trump and arguing that a stockpile would not benefit the American people.
House Representative Gerald E. Connolly of Michigan criticized the “cryptocurrency reserve” in a March 13 letter to Treasury Secretary Scott Bessent, stating that it provides “no discernible benefit to the American people” and would instead significantly enrich the president and his donors.
Connolly, who didn’t discern between the Strategic Bitcoin Reserve and the Digital Asset Stockpile, said Trump’s plans would constitute “unsound fiscal policy” because it chooses certain cryptocurrencies over others via social media.
Connolly said the Trump administration’s plan would also waste taxpayer dollars on what the Federal Reserve described as “the dumbest idea ever.”
“No strategic need has arisen that would necessitate investment in the volatile and speculative cryptocurrency market,” Connolly, the ranking Democrat on the House committee on oversight and government reform, said in the letter.
“[It] would constitute nothing more than a highly speculative taxpayer-backed hedge to provide bitcoin speculators the assurance that when the crash comes, the State will deploy this fund to rescue it.”
Democrat Gerald E Connolly’s letter to Treasury Secretary Scott Bessent. Source: US Committee on Oversight and Government Reform Democrats
However, the White House has said that the Digital Asset Stockpile will only hold onto cryptocurrency already forfeited. At the same time, the Bitcoin (BTC) reserve will only make acquisitions through budget-neutral strategies that won’t impact taxpayers.
Connolly also said that Trump failed to consult with Congress over the Bitcoin reserve plan, let alone obtain congressional authorization to create it.
Connolly also alleged there were conflicts of interest between Trump’s presidential duties and the Trump Organization’s ownership of the crypto platform World Liberty Financial, in addition to the Official Trump (TRUMP) memecoin.
The Democrat referred to the TRUMP token as a “money grab” that has allowed Trump-linked entities to cash in on over $100 million worth of trading fees.
This has been called Trump’s “most lucrative get-rich scheme yet,” Connolly added.
Related: Bitcoin reserve may end up a ‘potent political weapon’ — Arthur Hayes
Representative Maxine Waters, a Democrat on the House Financial Services Committee, also criticized Trump’s memecoin on Jan. 20, referring to a rug pull while claiming the launch represented the “worst of crypto.”
Connolly has asked Bessent to provide documents and communications related to the creation of a Bitcoin reserve and a complete list of steps the Trump administration has taken to avoid a conflict of interest.
Connolly also asked for a list of companies in which the Treasury has crypto-related financial interests. He also asked:
“Has the Presidential Working Group on Digital Asset Markets on which you serve, which has been tasked with developing a federal regulatory framework to govern the cryptocurrency reserve, reviewed financial disclosures by the Administration officials, including but not limited to Elon Musk?”
The Strategic Bitcoin Reserve will initially use cryptocurrency forfeited in federal criminal or civil cases. Meanwhile, the Digital Asset Stockpile will consist of cryptocurrencies other than Bitcoin, which could include XRP (XRP), Solana (SOL), Cardano (ADA) and Ether (ETH).
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The Bitcoin megaphone pattern features at least two higher highs and two lower lows, forming an expanding structure. Connecting these highs and lows with trendlines creates a megaphone-like appearance, reflecting market instability. The formation signals heightened volatility, with price swings becoming more pronounced over time. Depending on the trend direction, the pattern can indicate potential breakouts either upward (bullish) or downward (bearish). The megaphone pattern, also known as a broadening formation, is a technical analysis chart pattern that traders observe in various financial markets, including cryptocurrencies like Bitcoin. This pattern is characterized by its distinctive shape, resembling a megaphone or an expanding triangle, and signifies increasing volatility and market indecision. Here are its defining characteristics: Higher highs and lower lows: The pattern consists of at least two higher highs and two lower lows, forming an expanding structure. Each subsequent peak is higher than the previous one, and each trough is lower, creating diverging trendlines. Diverging trendlines: When trendlines are drawn connecting the higher highs and lower lows, they diverge, forming a broadening pattern that visually resembles a megaphone. Increased volatility: The formation of this pattern indicates heightened volatility as the price swings become more pronounced over time. This reflects a struggle between buyers and sellers, leading to wider price movements. Did you know? Bitcoin megaphone trading differs from traditional megaphone trading in that no physical megaphones are involved in the process. This variation of the pattern suggests a potential breakout to the upside. Initial uptrend: The price begins in an uptrend, reaching the first peak (point 1). First retracement: A pullback occurs, creating a lower low (point 2) that is still above the prior trend’s starting level. Higher high formation: The price rallies again, surpassing the previous high and forming a higher high (point 3). Lower low expansion: A more pronounced drop follows, leading to a lower low (point 4), extending the range of price fluctuations. Breakout and continuation: The price breaks above the resistance line (point 5), confirming a bullish breakout. This version of the pattern signals a potential downside breakout. Initial downtrend: The price begins with a downward movement, setting an initial low (point 1). First retracement: A minor upward correction follows, forming a lower high (point 2). Lower low expansion: A new low forms (point 3), further widening the range. Higher high formation : The price spikes again but still struggles to hold above prior highs (point 4). Breakout and reversal: The price breaks below the support line (point 5), confirming a bearish breakout. Did you know? A high-volume breakout from a megaphone pattern signals strong market conviction, confirming a real move. Low volume? It’s likely a fakeout, with the price reversing back. Remember, wait for a volume spike before entering. The megaphone pattern, or broadening formation, has appeared at various pivotal moments in Bitcoin’s trading history: In Bitcoin’s (BTC) formative years, extreme volatility often produced broadening formations. During this period, traders noted megaphone patterns — often with a bearish tint — reflecting wild price swings as the market struggled to find balance. Although less documented then, these early examples have since become reference points for understanding how chaotic market conditions can manifest as megaphone formations. As Bitcoin surged toward its then-all-time high near $20,000 in late 2017, a bearish megaphone pattern appeared on daily charts. This formation, marked by diverging trendlines with higher highs and lower lows, signaled increasing indecision and mounting selling pressure. Many technical analysts viewed it as a warning sign of an impending reversal — a forecast that materialized with the dramatic correction experienced in early 2018. In early 2021, as Bitcoin approached the $60,000 threshold, traders observed a bullish megaphone pattern forming on multiple timeframes. Characterized by a series of progressively higher highs and higher lows, this pattern indicated a period of heightened volatility combined with cautious optimism. The subsequent breakout confirmed a strong bullish momentum, reinforcing the pattern’s validity as a predictive tool in a maturing market. In this section, we’ll explore a number of trading strategies compatible with the Megaphone pattern. Breakout megaphone pattern trading involves entering a trade when the price decisively breaks out of the pattern’s boundaries with strong volume confirmation. a. Identifying key levels Draw upper and lower trendlines: Connect the pattern’s higher highs and lower lows to form the megaphone shape. These trendlines mark the critical resistance and support levels. Confirm the breakout zone: In a bullish scenario, the upper resistance line is the key zone to watch for a breakout. In a bearish scenario, focus on the lower support line. b. Volume confirmation Look for a volume surge: As the price breaches resistance (bullish) or support (bearish), a spike in volume indicates strong market participation. Reduce false breakouts: If volume remains weak at the breakout, there’s a higher chance of a fake move back into the pattern. c. Entry points Did you know? Placing your stop-loss inside the megaphone can help prevent excessive losses if the breakout fails and the price slides back into the pattern, giving you added protection in volatile markets. d. Profit targets Measure the pattern’s height by finding the vertical distance between its lowest and highest points, then use a portion of this measurement (commonly around 60%) to determine a balanced take-profit level. By projecting that percentage from the breakout point, whether above the upper resistance (for a bullish scenario) or below the lower support (for a bearish one), traders can set realistic targets while maintaining a favorable risk-to-reward ratio. Swing trading within a megaphone pattern involves capitalizing on the interim price moves between its support and resistance boundaries — without necessarily waiting for a definitive breakout. a. Identify key lines Upper resistance (R1, R2): These lines represent zones where price is likely to encounter selling pressure. Pivot line: A midpoint reference that can act as temporary support or resistance, depending on the direction of the price move. Lower support (S1, S2): Zones where buying pressure may emerge. b. Look for buy signals near support In a bullish megaphone, consider entering long positions near the lower support lines (S1 or S2), especially when you see a bounce or bullish candlestick formation. Confirm signals with oscillators (e.g., RSI, stochastics) or volume upticks indicating a shift in momentum. c. Sell signals near resistance In a bearish megaphone (or even within a bullish one, if you’re comfortable short-selling), traders may look for short entries near upper resistance lines (R1 or R2). A candlestick reversal pattern or a decline in volume at these resistance levels can reinforce the likelihood of a price reversal. d. Stop loss and take profit Place your stop-loss just above the resistance line (e.g., slightly above R2) to minimize losses if the price breaks out higher. For take-profit targets, consider exiting near the pivot line or the first support (S1). In cases of strong downward momentum, take partial profits at S1 and aim for S2 with the remaining position. e. Use the pivot line as a decision zone The pivot line in the center often serves as a short-term inflection point: Above the pivot: The bias may be bullish, favoring long positions. Below the pivot: The bias may be bearish, favoring short positions. If the price consistently hovers around the pivot line with no clear direction, wait for it to test either a support or resistance level to confirm the next swing. f. Combine volume and indicators Look for volume spikes at each support or resistance test. An uptick in volume when the price bounces off support or reverses from resistance can signal a stronger move. Also, tools like the relative strength index (RSI) or moving average convergence/divergence (MACD) can help confirm overbought/oversold conditions, strengthening the case for a reversal trade. False breakout megaphone pattern trading involves recognizing when the price briefly breaches the megaphone’s support or resistance, only to quickly return within its boundaries — a scenario often accompanied by low volume. In such cases, instead of chasing the breakout, traders look for confirmation of the reversal before entering a counter-trend trade. This strategy requires identifying key trendlines that define the pattern, monitoring volume for weak breakout signals, and entering a trade once the price re-enters the formation, typically placing stop-loss orders within the pattern to limit losses and setting profit targets based on the measured height of the formation. Given the inherent volatility of Bitcoin and the wild price swings characteristic of the megaphone pattern, robust risk management is essential to safeguarding your trading capital. Here are several key strategies to incorporate into your trading plan: The expanding range of the megaphone pattern signifies increasing uncertainty. Recognize that rapid swings can lead to both substantial gains and equally significant losses. Monitor market sentiment closely and be prepared for sudden reversals, especially during false breakouts where low volume might signal a lack of conviction. Position sizing: Determine your position size based on the maximum risk you are willing to take (typically 1%–2% of your trading account). Cautious use of leverage: While leverage can amplify profits, it equally increases potential losses. Use leverage sparingly and ensure your risk parameters can accommodate amplified swings. Stop-loss orders: Place stop-loss orders just within the megaphone formation’s boundaries. This positioning helps limit losses if the price reverses unexpectedly. Take-profit targets: Calculate your profit targets by measuring the vertical distance of the pattern and projecting a reasonable percentage from the breakout point. This ensures you secure gains while maintaining a favorable risk-to-reward ratio. Market conditions can shift rapidly. Continuously reassess your trades by: Monitoring volume and momentum: Use volume spikes and momentum indicators to adjust your stop-loss or take-profit levels dynamically, ensuring that your exit strategy adapts to the evolving market. Using trailing stops: Consider employing trailing stop orders to lock in profits as the price moves in your favor while still allowing room for potential gains. And that’s it — happy megaphone trading! David Sacks and his venture capital firm sold over $200 million in crypto and crypto-related stocks before he commenced his role as the White House AI and crypto czar, a White House memorandum disclosed. “You and Craft Ventures have divested over $200 million of positions related to the digital asset industry, of which $85 million is directly attributable to you,” said the memorandum dated March 5. The memorandum said “significant steps” were taken to reduce potential conflicts of interest before Sacks began his tenure as the White House AI and crypto czar — in which a major part of his role is to help create a legal framework for the crypto industry. Sacks offloaded all the “liquid cryptocurrency” in his portfolio, as well as Craft Ventures’ portfolio — the investment firm he co-founded in 2017 — including holdings in Bitcoin (BTC), Ether (ETH), and Solana (SOL) before US President Donald Trump’s inauguration on Jan. 20. The memorandum outlined which cryptocurrencies and crypto-related stocks David Sacks sold prior to Trump’s inauguration. Source: The White House Since Trump’s inauguration, the crypto market has seen a major decline amid a broader market downturn, with many blaming Trump’s proposed tariffs and uncertainty over US interest rates. While Bitcoin tapped a new all-time high of $109,000 just hours before Trump was sworn in as the 47th US president, it recently dipped below $80,000 on Feb. 27, erasing all post-election gains. At the time of publication, Bitcoin is trading at $84,155, as per CoinMarketCap data. Sacks also divested from publicly traded crypto-related firms, including Coinbase (COIN), Robinhood (HOOD), and stakes in private digital asset companies. Additionally, he sold his limited partner interest in Solana-focused Multichain Capital and crypto-focused venture capital firm Blockchain Capital. At the same time, Craft Ventures offloaded its holdings in Multichain Capital and Bitwise Asset Management. The memorandum is dated one day before Massachusetts Senator Elizabeth Warren urged Sacks in a March 6 letter to prove he no longer holds any digital assets, following Sacks’ claim in an X post that he sold off all his crypto. “Despite your public statements via X, it remains unclear exactly when you personally divested from BTC, ETH, and SOL, when Craft Ventures divested from Bitwise, and whether people close to you ‘may have held positions and sold into the recent price surge,” Warren said. Since Sacks started the White House crypto role, he has been a vocal advocate on various issues in the crypto industry, from the importance of a Strategic Bitcoin Reserve to not over-taxing the crypto industry. Related: Bitcoin panic selling costs new investors $100M in 6 weeks — Research Sacks recently shut down the idea of crypto transaction taxes on an episode of the All In Podcast after host Jason Calacanis proposed charging a 0.01% tax on every cryptocurrency transaction. “That’s always how taxes start. They are described as being very modest,” Sacks said. “You know, when the income tax started, it only applied to like a thousand Americans, and the legislators swore up and down that it would never be applied to middle-class people,” Sacks added. Magazine: Crypto fans are obsessed with longevity and biohacking: Here’s why The odds of a recession are rising, markets are crashing and President Donald Trump is forging ahead with tariffs. This volatile playbook is eerily similar to Trump’s first term, which started with a bang before giving way to one of the biggest bull markets in recent history. However, this time, Trump seems to have dropped the stock market as one of his favorite barometers of success, opting instead to focus on the long-term health of the US economy. Trump has promised to usher in America’s next “Golden Age,” but before that happens, the economy might need a painful dose of medicine. There is growing speculation that Trump is purposely stoking growth fears and crashing the market to force the Federal Reserve to lower interest rates. It might sound crazy, but there may be a method to Trump’s apparent madness. For decades, there was an unspoken rule in Washington that the president must remain tight-lipped about Fed policy. However, Trump threw that convention out the window when he publicly stated that the Fed should consult the president on interest rates. In February, Trump took to social media to say, “Interest Rates should be lowered.” When the central bank refused to play ball, the Trump administration took matters “into their own hands [by] crashing asset prices in an attempt to force Jerome Powell to cut interest rates,” according to entrepreneur and market commentator Anthony Pompliano. Pompliano and others say the Trump administration is intentionally crashing the stock market to bring borrowing costs down before the US government needs to refinance $7 trillion in debt over the next six months. The plan appears to be working, with the 10-year yield plunging nearly 60 basis points from its peak earlier this year. While the Fed isn’t expected to cut interest rates at its upcoming meeting in March, the odds of a May cut are now above 50%. Source: Alex Kruger The crypto and stock market sell-off on March 10 was largely driven by fears that the US economy was barreling toward a recession. Those fears were echoed in the bond market, with the 10-year yield plunging to the lowest level since Trump was elected. Against this backdrop, analysts at JPMorgan have upped their odds of a recession this year to 40% from 30%. Growing recession odds crash the crypto market. Source: CoinMarketCap “We see a material risk that the US falls into recession this year owing to extreme US policies,” the analysts said. Goldman Sachs economists also worry that Trump’s trade war could plunge the US economy into a sharp downturn. They raised their 12-month recession odds to 20% from 15%. According to Goldman, the outlook could worsen if the Trump administration remains steadfast in its policies “even in the face of much worse data.” Real-world asset (RWA) tokenization company Securitize has selected RedStone to provide data feeds for its tokenized products, which include BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL). With the partnership, Securitize’s funds can now be used across DeFi products, including Morpho, Compound and Spark. This could expand BUIDL’s use cases into money market exchanges and collateralized DeFi platforms. BlackRock’s BUIDL is the world’s largest tokenized Treasury fund, reaching $500 million in assets under management in less than four months. It was launched on the Ethereum network and can be accessed through Securitize. The fund invests all of its assets in cash, US Treasury bills and repurchase agreements. Cboe BZX, a leading securities exchange headquartered in Chicago, is seeking approval from US regulators to add staking into Fidelity’s Ether (ETH) exchange-traded fund. According to a March 11 filing, Cboe is proposing a rule change that would allow the Fidelity Ethereum fund to “stake, or cause to be staked, all or a portion of the Trust’s Ether through one or more trusted staking providers.” Staking could potentially boost the appeal of Ether ETFs by giving investors access to yields. In February, the Securities and Exchange Commission (SEC) acknowledged more than a dozen crypto-related ETF filings. Recognizing the SEC’s regulatory pivot since President Trump’s inauguration, Cboe is attempting to strike while the iron is hot. Crypto Biz is your weekly pulse on the business behind blockchain and crypto, delivered directly to your inbox every Thursday. 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Key takeaways
1. Bullish megaphone formation
2. Bearish megaphone formation
Megaphone history in Bitcoin trading
1. The early days: 2013–2014
2. The late 2017–early 2018 bearish formation
3. The early 2021 bullish turn
Trading strategies for the megaphone pattern
1. Megaphone breakout trading
2. Swing trading within the pattern
3. False breakout strategy
Risk management and considerations
1. Volatility awareness
2. Position sizing and leverage
3. Stop-loss and take-profit levels
4. Adaptive risk controls
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Crypto sell-off in an effort to prevent conflict of interest
Sen. Warren urged Sacks to prove he no longer holds crypto
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A coordinated crash
Recession odds spike to 40%: JPMorgan
BlackRock’s BUIDL enters DeFi
Staking ETH?
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