TLDR
- Fed Chair Jerome Powell views Bitcoin as a gold-like asset, not a dollar competitor.
- Powell dismisses claims Bitcoin fuels distrust in the Fed or US dollar.
- Powell supports cryptocurrency in banking if it ensures stability but doesn’t own Bitcoin himself.
- Bitcoin nears $100K, boosted by Trump’s pro-crypto election win and cabinet picks.
- Powell rejects stepping down despite Trump’s criticism.
United States Federal Reserve Chair Jerome Powell has again compared Bitcoin to gold. In his eyes, Bitcoin is directly competing with gold as an asset not the US dollar like many believe. Speaking at the DealBook Summit in New York on Dec. 4, Powell emphasized that Bitcoin’s role is actually limited to being a virtual equivalent to gold rather than a form of payment or store of value.
“People are not using it as a form of payment or as a store of value. It’s highly volatile. It’s not a competitor for the dollar. It’s really a competitor for gold.”
This is not the first time Powell has made these statements. He shared similar sentiments about cryptocurrency at an 2021 event hosted by the Bank for International Settlements. At that time, Bitcoin was valued at $58,200 and now it is valued at $100,000. Bitcoin gained a 70% increase since 2021. The value of gold only rose 52% during the same time period.
Moreover, Powell also does not think that Bitcoin’s popularity is because of a lack of trust in the US Dollar or the Federal Reserve. Powell believes that this notion of Bitcoin replacing the US dollar is not how people view cryptocurrency.
An interesting point to note is that Powell himself does not own Bitcoin, mentioning that he is not allowed to do so. However, he didn’t say who is forbidding it. The Federal Chair is open to the idea of cryptocurrency companies doing business with official banks as long as it doesn’t damage the system’s stability.
Powell believes that consumer protection is an issue that needs focus but this is an area the Federal Reserve does not directly regulate.
Bitcoin Continues to Surge After Trump’s Win
It comes as no surprise that the Federal Reserve’s Jerome Powell is making statements about Bitcoin. After Donal Trump’s was elected President in November, Bitcoin and other cryptocurrencies like Dogecoin have soared. This could be attributed to the fact that Trump has generally voiced support for cryptocurrency. He and his three sons, Eric, Barron, and Donald Jr., have launched World Liberty Financial. This new venture is a decentralized finance (DeFi) money market platform. The venture also introduced a new cryptocurrency known as the $WLFI. This demonstrates that Trump is pro-crypto.
Trump’s win has also led to some important changes to the US cabinet, with pro-crypto figures like Howard Lutnick and Scott Bessent chosen for key economic roles. They will be leading the Secretary of Treasury and Commerce Departments. This means that the cabinet might possibly be the most pro-crypto one we have ever seen.
Plus, Donald Trump has also chosen pro-crypto Paul Atkins to be the new chair of the Securities and Exchange Commission after Gary Gensler stated he would resign when Trump will come to office on January 20th, 2025.
As for Powell, Trump is not the biggest fan. Donald Trump has expressed criticism for some of Powell’s decisions but the Federal Chair has no intention of resigning his position, even if he faces some pressure.
