U.S. Treasury Draws a Hard Line: No Rescue for Bitcoin as Sell-Off Intensifies
The Bottom Line
In a stark message to digital asset markets, U.S. Treasury Secretary Scott Bessent told lawmakers that investors facing losses in the current Bitcoin downturn should expect no federal safety net. The remarks, delivered during a tense congressional hearing, come as the flagship cryptocurrency battles to hold the $70,000 level.
Testifying before the House Financial Services Committee on February 4, Secretary Bessent was pressed by Representative Brad Sherman (D-CA) on whether the administration possessed the authority—or the inclination—to intervene and stabilize crashing crypto prices. Bessent's response was definitive: "The Treasury Department has no such authority, and the administration has no such intention."
He elaborated that while the U.S. government holds a substantial cache of Bitcoin—valued between $15 and $20 billion—acquired through criminal asset forfeitures, these are not tools for market management. The holdings, some seized years ago at a fraction of their current worth, are governed by a 2025 executive order that bars their sale and designates them for a future national digital asset reserve.
"Any future additions to government holdings will come through budget-neutral means like forfeitures, not through open-market purchases with taxpayer funds," Bessent stated, explicitly rejecting the notion of using banks or public money to prop up prices. He pointed to the recently enacted GENIUS Act as the cornerstone of the administration's digital asset policy, aimed at fostering innovation in dollar-based stablecoins rather than backstopping speculative crypto assets.
The Secretary's testimony marks a deliberate pivot from earlier political discourse that entertained the idea of a strategic Bitcoin reserve. He framed Bitcoin as a high-risk, speculative asset, emphasizing that "investment decisions and their consequences rest solely with market participants."
The firm "no bailout" stance arrived at a precarious moment for markets. On February 5, Bitcoin briefly broke below $70,000, hitting its lowest point since November 2024 and extending a brutal sell-off that has erased its late-2025 gains. Year-to-date, Bitcoin is down approximately 16%, with total crypto market capitalization shedding over 12% to around $2.7 trillion in early February.
Analysts attribute the slump to a confluence of factors: a broad risk-off sentiment driven by geopolitical tensions and trade policy uncertainty, profit-taking by large holders ("whales"), sustained outflows from spot Bitcoin ETFs, and spillover weakness from the tech sector.
Market Reactions & Analyst Views
The policy clarity was met with mixed reactions. "This is the cold shower the market needed," said Marcus Thorne, a portfolio manager at Veritas Capital. "It removes a false catalyst and forces a focus on real adoption and utility, not imagined government backstops."
Others were more critical. Anya Petrova, founder of the crypto research firm Decentralized Insight, argued, "The government is sitting on billions in seized Bitcoin but claims it's hands-off. This isn't neutrality; it's selective engagement that benefits their balance sheet while offering zero stability to the ecosystem they're profiting from."
A more emotional response came from Rick Dalton, a retail investor and active commentator on social media: "They're happy to take our taxes and seize assets to build their own 'reserve,' but when hardworking Americans face losses after years of mixed signals, they just wash their hands? It's hypocrisy. They're letting the market burn to make a point."
Meanwhile, Dr. Elaine Zhou, a financial regulation professor at Stanford, offered a measured perspective: "Secretary Bessent's testimony is a logical extension of established policy. Treating Bitcoin as a commodity-like asset means no lender-of-last-resort function. The real impact is the killing of the 'Fed put' narrative for crypto, which may lead to healthier, less speculative price discovery long-term."