Cryptocurrency market witnessed its largest drop since September following Fed’s Bitcoin comments.
Bitcoin fell below $100,000, triggering $700 million in settlements.
Fed Chairman Jerome Powell clarified that the U.S. central bank “cannot own Bitcoin.”
Bitcoin shows signs of recovery, rallying above $102,000.
The Fed’s Stance on Bitcoin
The cryptocurrency market experienced significant turbulence when Federal Reserve Chairman Jerome Powell announced that the U.S. central bank “cannot own Bitcoin.” This statement came during a routine FOMC meeting, where typically the focus is on interest rates and monetary policy, but this time, it veered into the realm of digital currencies.
Powell’s clear position on Bitcoin ownership by the Fed sent shockwaves through the market. Why? Because if the central bank, which holds significant sway over financial markets, declares it can’t or won’t hold Bitcoin, it signals a potential lack of institutional backing for the cryptocurrency.
“The Federal Reserve Act says what we can own, and we’re not looking for a law change. That’s the kind of thing Congress should consider, but we’re not looking for a change in law at the Fed,” Powell added.
Market Reaction: The Plunge and the Rally
Following the announcement, Bitcoin prices plummeted, breaking the psychological barrier of $100,000, reaching lows not seen since earlier this year. This drop led to over $700 million in settlements across various trading platforms, showcasing the direct impact of policy statements on crypto volatility.
However, the crypto market, known for its resilience, didn’t remain down for long. Bitcoin staged a recovery, rallying above $102,000 within hours. This quick rebound raises questions about investor confidence and the underlying strength of Bitcoin’s market position despite regulatory headwinds.
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