Coinspeaker Fed Chair Powell Labels Bitcoin ‘Digital Gold,’ Rejects Rivalry with US Dollar
Federal Reserve Chair Jerome Powell, speaking candidly at the New York Times DealBook Summit on Wednesday, shifted the narrative surrounding Bitcoin. Far from labeling it a competitor to the US dollar, Powell positioned the cryptocurrency as a digital rival to gold. This statement has stirred conversations in financial circles.
“People use Bitcoin as a speculative asset, right? It’s like gold—only it’s virtual, it’s digital,” Powell said.
While Bitcoin enjoys a reputation for disrupting traditional finance, its volatility and lack of widespread use for payments or savings disqualify it as a dollar competitor, in his view. “People are not using it as a form of payment or a store of value,” he added.
The chairman didn’t mince words about Bitcoin’s instability, calling it “highly volatile.” Such volatility underpins his assertion that Bitcoin aligns more closely with gold’s speculative appeal than the US dollar’s stability. These remarks revealed Powell’s stance and highlighted the Federal Reserve’s perception of the cryptocurrency landscape.
Federal Reserve’s Role in the Crypto Era
Digging deeper into the Fed’s relationship with digital assets, Powell stressed that the central bank’s role is primarily observational. “Our job is to see how these assets interact with the banking system,” he said. Notably, he clarified that while the Fed monitors developments in the crypto world, it does not directly regulate these assets.
When pressed on his personal stake in the crypto market, Powell confirmed that he abstains from holding any digital assets. “I’m not allowed to own such assets because of my position,” he stated, demonstrating a commitment to maintaining impartiality amidst the evolving crypto ecosystem.
While crypto dominated the spotlight, Powell took time to address the broader economy. He painted an optimistic picture, describing the US economy as being in “great shape right now.” Yet, he acknowledged challenges, particularly around growth and inflation. Growth, he admitted, has outpaced expectations, and inflation continues to hover slightly above anticipated levels, raising questions about the future of monetary policy.
Interest Rates and Economic Strategy
In discussing monetary policy, Powell emphasized caution. With a strong labor market and reduced economic risks, he hinted that the Federal Reserve could afford to proceed slowly with interest rate cuts. This strategy reflects a balancing act between maintaining economic momentum and curbing inflation.
The CME FedWatch Tool suggests a 75% chance of a 25 basis point rate cut at the Fed’s upcoming December 18 meeting. If enacted, the benchmark rate would shift to a range of 4.25%-4.5%, down from its current 4.5%-4.75% range. These adjustments follow a series of rate cuts totaling 75 basis points across September and November, signaling the Fed’s response to fluctuating economic dynamics.
Powell’s comments marked his final public statements ahead of the Federal Open Market Committee’s pivotal December meeting. The committee’s decision will likely serve as a bellwether for the US economy entering 2024, influencing markets and consumer confidence alike.
Bitcoin’s Evolving Narrative
Returning to Bitcoin BTC $98 640 24h volatility: 2.8% Market cap: $1.95 T Vol. 24h: $97.06 B , Powell’s comparison to gold signals a shift in how the cryptocurrency is perceived at institutional levels. His remarks come as Bitcoin trades at $98,050, reflecting a modest 2.13% uptick after his statements, according to CoinMarketCap.
BTC Price | Source: CoinMarketCap
Jeff Park, an Active Portfolio Manager at Bitwise Asset Management, see Powell’s “digital gold” remark as validation for Bitcoin’s place in the investment narrative. “From this day forth, you are no longer permitted to ask me to waste my breath and energy on the investment case for Bitcoin,” Park declared, underscoring how mainstream the cryptocurrency’s narrative has become in recent years.
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Fed Chair Powell Labels Bitcoin ‘Digital Gold,’ Rejects Rivalry with US Dollar
