Last week, Federal Reserve Chairman Jerome Powell wanted everyone to know one thing: the Federal Reserve will not touch Bitcoin. Not now, not ever.

In the press conference following the Fed's monetary policy meeting, Powell made it clear that any plan to accumulate Bitcoin would not receive his support. What was the result? The cryptocurrency market immediately plunged.

The price of Bitcoin, which had already risen earlier this week, plummeted sharply. The odds of the Bitcoin Strategic Reserve (BSR) dropped from 40% to 34% on Polymarket just hours after Powell spoke. Meanwhile, the entire cryptocurrency market lost 7.5% of its value, wiping out billions of dollars in an instant.

It’s no surprise that traders are panicking. But the issue here is that a recent report on Wu Blockchain indicated that Trump does not need the Fed's approval to start accumulating BTC, as we initially feared.

Trump's executive solution

But Trump doesn’t need to care about what Powell says. Why? Because the reality is that Powell really can’t stop him. If Trump wants a Bitcoin Strategic Reserve Fund, he doesn’t need Powell or the Fed. He can go directly to the U.S. Treasury and do it with an executive order.

Here’s how it works: the Treasury controls something called the Exchange Stabilization Fund (ESF). This fund was created to stabilize the U.S. dollar and handle financial crises. It holds assets like gold, U.S. dollars, and Special Drawing Rights (SDR). What this fund does not hold is Bitcoin.

Trump could issue an executive order directing the Treasury to change that. Simple. Unlike most government spending, the ESF does not require congressional budget approval. This gives the President and the Secretary of the Treasury unusual control over how the funds are used.

During the COVID-19 pandemic, the Treasury leveraged the ESF to rescue the markets, and Congress had to scramble afterwards to impose restrictions. If Trump uses this fund to buy Bitcoin, Congress may investigate, but by then, the purchases may have already been made.

This is a quick and dirty option, but not invulnerable. Executive orders do not last forever. Another president could come along, overturn Trump’s Bitcoin initiative, and shift ESF funds back to safer, more traditional investments. However, as a short-term strategy, this is a way to completely bypass Congress.

Republican Senator Cynthia Lummis has proposed legislation on this issue. Her "U.S. Bitcoin Strategic Reserve Act" is currently under review by the Senate Banking Committee.

The issue here is that passing a bill in Congress is not easy. Even with a Republican majority, bipartisan support is very rare these days. The process could take months, if not years. Both the House and Senate must approve the bill before Trump can sign it into law.

Why bother with the legislative route? It brings stability. Unlike an executive order, a law cannot be canceled by the next administration with a stroke of a pen. A congressional mandate would lock Bitcoin into the U.S. financial system as a strategic asset, creating a framework for future reserves.

For Trump, this is a gamble. The legislative process is slow, and cryptocurrency doesn’t really get unanimous support on Capitol Hill. But if successful, this would be the strongest endorsement of Bitcoin as part of the financial future of the U.S., just as he continues to say.

What about the Federal Reserve?

Some might wonder if the Federal Reserve could start buying Bitcoin. Theoretically, yes. The Fed conducts open market operations all the time, buying and selling assets like government bonds to stabilize the economy. But Powell's comments suggest this is not going to happen anytime soon.

"The Fed is not the place for Bitcoin," Powell said. That’s a pretty definitive no. Even if the Fed wanted to buy Bitcoin, they would need a new policy framework and might require some changes to current laws. Powell has made it clear that he is not interested in pushing both.

This makes the Treasury the only real option for government-led Bitcoin reserves. And while Powell may not like this idea, he cannot stop the Treasury from acting independently.

The Trump Factor

Trump appointed Powell as Fed Chairman in 2018, but their relationship soured immediately. The president spent most of his first term criticizing Powell for raising interest rates, even threatening to fire him multiple times.

Back to 2024, nothing has changed. Trump still sees Powell as an obstacle and he is very eager to keep this position.

Interestingly, the president's family's cryptocurrency project, World Liberty, wasted no time responding to Powell's speech. On-chain data shows the project began buying altcoins just two minutes after the press conference started. All of them almost immediately saw losses, but we don't think Trump cares.

DYOR! #Write2Win #Write&Earn $BTC