Federal Reserve Chair Jerome Powell recently shared his perspective on Bitcoin during the New York Times DealBook Summit, describing the cryptocurrency as "digital gold" that doesn't compete with the US dollar.
Bitcoin as a Speculative Asset
Powell noted:
"People see Bitcoin as a speculative asset, right? It's like gold—but virtual and digital."
He emphasized Bitcoin's extreme volatility makes it unsuitable as a payment method. When addressing whether Bitcoin threatens the dollar's dominance, Powell stated:
"Bitcoin isn't a competitor to the dollar—it's more a competitor to gold. That's my view."
This isn't new territory for Powell. In 2021, he similarly observed that while Bitcoin's volatility prevents it from functioning as currency, it could serve as a "gold substitute" due to its scarcity properties.
Bitcoin's Enduring Appeal
In June 2023, Powell told Congress that Bitcoin demonstrates "staying power"—a phrase referring to an asset's ability to remain relevant long-term. This remark significantly boosted market interest in Bitcoin.
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Post-Election Bitcoin Surge
Following November's US presidential election, Bitcoin's price rallied amid pro-crypto policy signals, surpassing $100,000 on December 5.
President-elect Donald Trump has positioned himself as crypto-friendly, declaring in July 2024 his intent to become "America's first Bitcoin president." His recent appointment of former regulator Paul Atkins—a known crypto advocate—as SEC chairman further energized markets.
Fed's Stance on Crypto Regulation
When asked about the Fed's approach to cryptocurrencies, Powell clarified:
- The central bank focuses on preventing crypto-bank interactions from destabilizing the financial system
- The Fed doesn't directly regulate crypto but monitors systemic risks
- Powell humorously added that he's "not allowed" to personally invest
Addressing speculation about Trump pressuring him to resign, Powell affirmed last month he wouldn't step down, stressing the Fed's independence from political influence.
FAQ: Bitcoin and the Federal Reserve
Q: Does the Fed consider Bitcoin a currency?
A: No—Powell views it as a speculative asset akin to gold, not a functional currency.
Q: Could Bitcoin replace the US dollar?
A: Extremely unlikely. Powell explicitly states they serve different purposes without direct competition.
Q: How might Trump's presidency affect crypto markets?
A: His pro-crypto rhetoric and regulatory appointments suggest favorable policies, though macroeconomic factors remain decisive.
Q: Why does Bitcoin's volatility matter?
A: It limits real-world utility for payments despite being a viable store-of-value asset.
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Disclaimer: This content provides market information only. All views expressed are for reference, not investment advice. Investors should make independent decisions—the author assumes no liability for direct/indirect losses from trading.