Fed Can’t Hold Bitcoin, No Plans Yet To Change Law, Powell Says

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As a seasoned crypto investor with over a decade of experience navigating the rollercoaster ride that is the digital currency market, I must say that Powell’s recent statement has sent a chill down my spine. While I have grown accustomed to the unpredictable nature of Bitcoin and its price fluctuations, this latest move by the Fed chair feels like a punch in the gut.

Jerome Powell, chair of the US Federal Reserve, recently dismissed speculations that the Fed may add Bitcoin to its reserves. At the end of the its two-day meeting, Powell stated that the Fed isn’t allowed to own Bitcoin and doesn’t desire to get involved in any government initiative to create a stockpile of digital assets. 

The announcement about Bitcoin followed the Fed’s decision to reduce interest rates and hint at uncertain monetary strategies for the coming months. Trump’s announcement of crypto-friendly appointees made Powell’s statement unexpected. As a result, Bitcoin’s price dropped by 5.7% almost instantly, with other major altcoins such as XRP also seeing value decreases.

Powell Thumbs Down Plans To Add BTC To Reserves

Discussions about accumulating Bitcoin grew in popularity following Donald Trump’s election victory and subsequent presidency. During his campaign, Trump utilized Bitcoin and cryptocurrency as a means to garner support from influential figures in the crypto world. With the appointment of pro-crypto individuals to high-level government positions and promises to overhaul the Securities and Exchange Commission (SEC), many anticipate that a Bitcoin reserve will be established soon.

Powell says Fed cannot hold Bitcoin, not seeking to change that

— ST Business Desk (@stbusinessdesk) December 18, 2024

Nonetheless, Powell clearly asserted that traditional U.S. banks do not have the ability to possess Bitcoin. He based this on the stipulations of the Federal Reserve Act, which specifies what financial institutions may own, and Bitcoin does not fall under this classification.

He announced that they’re not looking to change the law soon, and it’s up to Congress to decide. 

Interest In Bitcoin Strategic Reserve Continues To Grow

Although the Federal Reserve Chair may not view Bitcoin as a suitable reserve asset, there’s increasing interest in exploring its potential role as such. During the elections, Donald Trump endorsed the idea and advocated for the U.S. to lead in cryptocurrency advancements. Furthermore, proponents like Wyoming Senator Cynthia Lummis are advocating for Bitcoin to be recognized as a reserve asset.

This year, Senator Lummis submitted a proposal urging the U.S. Treasury to acquire Bitcoin and incorporate it into their reserves. The proposed legislation, known as the Lummis bill, suggests that the Treasury establish a program to purchase approximately 20,000 Bitcoins each year for a period of five years. This acquisition would continue until the reserve holds one million tokens in total.

Bitcoin’s Price Drops After Powell Statement

Following Powell’s remarks, the market showed a negative response, resulting in a decrease in Bitcoin’s price to around $100,300, representing a drop of approximately 5.7% compared to its closing value from the preceding day. As we speak, the trading range for Bitcoin over the last 24 hours stands between $98,839 and $105,306.

In similar fashion to Bitcoin, other prominent cryptocurrencies experienced declines. Ethereum fell by 6.8%, Solana dropped by 8.1%, and Binance Coin decreased in value by 4.6%. Dogecoin was the most affected among top altcoins, dropping to $0.348, representing a decrease of 11%. Meanwhile, the stock market suffered after a Fed official’s statement, with the Nasdaq 100 losing 2%, and the S&P 500 ending the trading day with a loss of 1.55%.

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2024-12-20 05:11