On December 20, cryptocurrencies collectively plummeted.
Bitcoin has fallen below $95,000. As of the time of writing, Bitcoin was priced at $94,541, down more than 7% in 24 hours; Ethereum was priced at $3,243, down more than 11%.
On December 19, Jerome Powell, Chairman of the US Federal Reserve, stated at a press conference following the December interest rate meeting that the Federal Reserve does not intend to include Bitcoin in its balance sheet. 'We are not allowed to own Bitcoin,' Powell said. The Federal Reserve Act specifies what the Federal Reserve can own, and the Federal Reserve does not seek to change that; this is a matter for Congress to consider, but the Federal Reserve does not wish to modify the law.
According to previous reports from Xinhua News Agency, Jerome Powell, Chairman of the US Federal Reserve, stated on December 18 that the Federal Reserve has no intention of participating in any government-led 'hoarding Bitcoin' plan, as the Federal Reserve, being the central bank of the US, 'has no authority to hold Bitcoin.'
Powell's remarks were in response to President-elect Donald Trump's idea of promoting the establishment of a 'Bitcoin strategic reserve' by the federal government after taking office. Trump did not elaborate, only stating that initial reserves could include about 200,000 Bitcoins confiscated from criminals, which are reportedly worth approximately $21 billion at current market prices.
According to Reuters, Trump's public support for the development of the cryptocurrency industry has invigorated the 'crypto community,' and the prospects of his return to power have driven up prices of cryptocurrencies like Bitcoin in the US market.
Trump plans to create a new position of Director of Artificial Intelligence and Cryptocurrency Affairs at the White House after taking office, nominating former PayPal executive David Sacks for the role. He also nominated Paul Atkins to serve as Chairman of the Securities and Exchange Commission. Both are strong advocates for the development of cryptocurrencies.
However, some analysts point out that due to the frequent and severe price fluctuations of Bitcoin over its 15-year development, it is not very reliable as a means of storing value or as a medium of exchange, which are key functions of a national reserve currency.
Some within the Republican Party have already responded to Trump's proposal. Federal Senator Cynthia Lummis has drafted a proposal to establish a Bitcoin reserve, intending for the US Treasury to purchase 200,000 Bitcoins annually, with a goal of accumulating 1 million Bitcoins, funded by deposits from various Federal Reserve Banks and gold reserves.
According to a report released by Barclays Bank this week, establishing such a Bitcoin reserve would require Congressional approval and the issuance of new bonds by the Treasury. Some analysts estimate that the related plan 'will face strong resistance from the Federal Reserve.'
Powell stated that the legal issues surrounding the establishment of a Bitcoin strategic reserve 'are matters for Congress to consider, but the Federal Reserve does not intend to seek a revision of the law.'
Federal Reserve officials generally remain skeptical about digital assets like cryptocurrencies, and the previous plan to create a 'digital dollar' has already been shelved. On the 4th of this month, Powell stated: 'The Federal Reserve is responsible for regulating and supervising banks, and hopes that the interaction between the cryptocurrency industry and banks... will not threaten the health of the banking system.'