Federal Reserve Chair Jerome Powell has shared his opinions about the crypto market. The U.S. Fed chairman advocates that Bitcoin is a speculative asset similar to Gold and does not see it as a substitute for the U.S. Dollar. Powell spoke at the Innovation Summit by the Bank of International Settlements (BIS). The online conference’s most important points were the rise of Bitcoin, the digital dollar plans, and stablecoins.
Powell admitted that Bitcoin is a speculative asset with no backing and more a replacement for Gold than the dollar during the summit. He highlighted the risks of owning crypto assets due to their volatility and energy requirements for mining. Notwithstanding comparisons with Gold, Powell’s remarks to inspire growth sentiments in the market. Powell’s stress on the dollar’s strength upon “private cryptocurrencies” erupted an adverse reaction in the market. He elucidated that private offerings such as Bitcoin have attempted to enhance the national fiat currency but have been a failure.
Bitcoin price plummets after FED Reserve’s comments about Bitcoin
Bitcoin’s price dropped to $56,500 this morning after Powell’s comments. The leading crypto failed to climb over $60,000 resistance last week. Moreover, Bitcoin has been in a parallel line between $57,500 and $56,500. Powell may not have much interest in volatile cryptocurrency, and he suggested that he comprehends the market as more directed at succeeding Gold than the U.S. Dollar. However, proponents can take it optimistically, considering Bitcoin’s performance over Gold over the last year alone.
Gold proceeds to be relatively stable, whereas Bitcoin has witnessed magnificent growth over the last years. More prominent companies like Square, Tesla, and MicroStrategy have been actively acquiring Bitcoin this year. The investment shift has brought the companies huge gains in value and Bitcoin’s surge upwards. Nevertheless, the move symbolizes a loss of faith in the U.S. dollar. The Federal Reserve Chair is not inclined to cryptocurrency. His opinion may change in 2021 as market adoption proceeds to explode. Moreover, Powell restated his stand on exercising a careful approach when it comes to digital dollar launch. He added that the U.S. doesn’t have to win the race of launching CBDCs quickly, but the U.S. needs to make the shift.
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