Jerome Powell has left no room for speculation: the Federal Reserve will not hold Bitcoin. Despite President-elect Donald Trump’s promises to crypto enthusiasts about a Strategic Bitcoin Reserve, Powell dismissed the idea outright during a press conference following the December 18th FOMC meeting. “We cannot hold Bitcoin,” he stated, adding that the Fed is not pushing Congress for legislative changes to make it possible.
Powell’s remarks highlight a stark divide between the Federal Reserve’s cautious stance on digital assets and the growing enthusiasm for cryptocurrencies as strategic assets. His position underscores the Fed’s commitment to maintaining the integrity of the U.S. dollar while steering clear of the volatility and risks associated with Bitcoin. This separation is seen by some as a move to preserve stability in the traditional financial system, but it has disappointed those who view Bitcoin as a hedge against inflation.
The impact of Powell’s comments was immediate. Bitcoin’s value dropped 5.9%, settling at $100,605—its sharpest decline since reaching a record-breaking $108,000 days earlier. The ripple effects spread across the cryptocurrency market, with Ethereum, XRP, and Solana plunging between 4% and 11%. The reaction underscores the fragility of digital asset markets to regulatory and policy signals.
Trump, who has been vocal about making Bitcoin a cornerstone of U.S. economic strategy, now faces a Federal Reserve unwilling to align with his vision. His proposed Strategic Bitcoin Reserve was a key campaign promise aimed at positioning the U.S. as a leader in cryptocurrency, countering China’s dominance in the sector. Yet, Powell’s refusal signals formidable obstacles ahead for such an initiative.
The divide between the incoming administration’s ambitions and the Federal Reserve’s priorities raises critical questions about the future role of Bitcoin in the U.S. financial system. For now, Powell’s firm rejection has cast doubt on any near-term integration of cryptocurrencies at the Federal Reserve, leaving Bitcoin advocates grappling with diminished prospects.
JUST IN: Over $700M in longs liquidated from Bitcoin as Federal Reserve Chair Jerome Powell shuts down BTC rumors:
"Should the U.S. government build a Bitcoin reserve?"
Powell: "We're not allowed to own Bitcoin. We're not seeking a law change." pic.twitter.com/O27Ozbum1I— Jacob King (@JacobKinge) December 18, 2024
Sources:
https://www.usatoday.com/story/money/2024/12/18/federal-reserve-bitcoin-powell-trump/77073856007/
https://finance.yahoo.com/news/fed-cant-hold-bitcoin-not-211628096.html