A few days ago, Powell said: We are not allowed to hold Bitcoin. Bitcoin fell from 108,000 to 92,500.
Today, Fed's Daly said: Cryptocurrency should not be confused with gold and is still far from becoming a "currency".
San Francisco Fed President Mary Daly believes that cryptocurrencies should be viewed as a separate asset class and not lumped in with gold as they are often.
“I think cryptocurrency is a complex thing, and the service we need to provide to everyone is to really unpack what it means, and once we do that, then define it," Daly said on the podcast. "It can be a currency, it can be a medium of exchange, it can be a stock — an asset that holds value or sometimes loses value. We just have to define those terms."
“So I don’t think it’s like gold,” Daly added. “It sometimes has characteristics similar to gold, but I don’t think it is an asset like gold.”
Daly's comments differ slightly from those of Federal Reserve Chairman Jerome Powell, whose remarks on Bitcoin earlier this month surprised the cryptocurrency community.
Powell said at the New York Times DealBook conference: “People view Bitcoin as a speculative asset. It’s like gold, only it’s virtual and digital. People are not using it as a means of payment or a store of value. It’s extremely volatile. It’s not a competitor to the dollar; it’s a competitor to gold.”
Daly agrees with Powell's view that cryptocurrencies are not yet ready to be considered currency, while some cryptocurrency bulls believe that at this stage of its lifecycle, cryptocurrencies should become currency.
Daly explained: “The characteristic it needs is that it must grow with the economy. Therefore, its value does not change based on people's demand. When more people need a one-dollar bill, the value of a one-dollar bill does not increase. What causes the dollar’s value to fluctuate is the economy and our growth relative to other countries. Therefore, to become a currency, (cryptocurrency) must perfect this characteristic.”
While cryptocurrencies seem to have a long way to go before Congress approves them as a form of currency, that hasn’t stopped the bullish momentum surrounding various digital asset trades.
Since Trump was elected on November 5, the most popular cryptocurrency, Bitcoin, has performed exceptionally well, breaking the $100,000 mark for the first time on December 4. The price of Bitcoin has risen 38% since Election Day and 106% year-to-date. Cryptocurrency-related stocks, such as Coinbase (COIN) and Robinhood (HOOD), have soared 45% and 204%, respectively, so far this year.
The growing enthusiasm for cryptocurrencies also includes recent investments from some entities that typically favor traditional stocks and bonds. In May, Wisconsin's pension fund increased its Bitcoin holdings, purchasing over $160 million in shares of two new funds approved earlier this year by regulators. Michael Saylor's MicroStrategy (MSTR) has also continued to actively buy Bitcoin in recent weeks.
Trump's new administration has appointed venture capitalist David Sacks as the cryptocurrency czar, responsible for overseeing issues and initiatives related to cryptocurrencies. One initiative may be to establish a Bitcoin reserve, a suggestion that Trump supporters have already put forward.
“There may even be those focused on making the U.S. a leader in cryptocurrency, Bitcoin mining, and other areas mentioned by Trump, which is a huge shift,” said Mark Palmer, an analyst at Benchmark Company. “In our analysis, we assume that by the end of 2026, the price of Bitcoin will reach $225,000.” Palmer added, “We are seeing more and more institutions adopting Bitcoin, and that’s the key.”
