December 20, cryptocurrency collectively plummeted.
Bitcoin has fallen below $95,000; as of the time of writing, Bitcoin was reported at $94,541, down more than 7% in 24 hours; Ethereum was reported at $3,243, down more than 11%.
On December 19, after the Federal Reserve's interest rate meeting, Chairman Powell stated at a press conference that the Fed does not intend to include Bitcoin in its balance sheet. 'We are not allowed to own Bitcoin,' Powell said. The Federal Reserve Act stipulates what the Fed can own, and the Fed is not seeking to change that; this is a matter for Congress to consider, but the Fed does not wish to amend the law.
According to previous reports from Xinhua News Agency, Jerome Powell, Chairman of the U.S. Federal Reserve, said on December 18 that the Fed has no intention of participating in any government-led 'Bitcoin hoarding' plan, as the Fed, as the central bank of the U.S., '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' after taking office. Trump did not provide details but mentioned that the initial reserves could include around 200,000 Bitcoins confiscated from criminals, which are reportedly worth about $21 billion at current market prices.
According to a report by Reuters, Trump’s public support for the development of the cryptocurrency industry has raised hopes in the 'coin circle' regarding his prospects for re-election, causing prices of cryptocurrencies like Bitcoin to soar in the U.S. market.
Trump plans to establish a position of Director of Artificial Intelligence and Cryptocurrency Affairs at the White House after taking office, nominating former PayPal executive David Sachs for the role. He also nominated Paul Atkins to be the Chairman of the Securities and Exchange Commission. Both of these individuals are strong supporters of the development of cryptocurrencies.
However, some analysts pointed out that due to Bitcoin's frequent and severe price fluctuations during its 15-year development, it is not very reliable as a store of value or medium of exchange, which are key functions of national reserve currencies.
Within the Republican Party, some have responded to Trump's proposal. Federal Senator Cynthia Lummis has drafted a proposal to establish a Bitcoin reserve, intending for the U.S. 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 not only congressional approval but also the Treasury to issue new bonds. Some analysts estimate that the related proposal 'will face strong resistance from the Federal Reserve.'
Powell stated that the legal issues regarding 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 been shelved. Powell stated on the 4th of this month: 'The Federal Reserve is responsible for regulating and supervising banks, and we hope that the interaction between the cryptocurrency industry and banks... will not threaten the health of the banking system.'