In the midst of a tough economic climate, Federal Reserve Chairman Jerome Powell has shifted his perspective on Bitcoin, sparking cautious optimism among cryptocurrency enthusiasts.
During a recent appearance at the New York Times DealBook Summit, Powell compared Bitcoin to gold, describing it as a "speculative asset" rather than a rival to the US dollar. This marks a notable change from his earlier skepticism toward the digital currency, which currently boasts a market capitalization nearing $1.4 trillion.
Powell’s Evolving View on Bitcoin
Changpeng Zhao, better known as CZ, the founder of Binance, quickly pointed out that Powell’s comments represent an "improvement to the previous narrative," suggesting that the shift was well-noted among industry leaders.
"That’s an improvement to the previous narrative. Baby steps…," tweeted CZ 🔶 BNB (@cz_binance) on February 15, 2025.
Powell’s reference to Bitcoin as "like gold only… virtual… digital" hints at a growing acceptance of crypto assets within mainstream financial systems.
"Bitcoin is digital gold. It’s not here to replace the dollar, but a strong competitor to gold," observed Kashif Raza (@simplykashif) in a tweet accompanied by a video clip.
However, Powell maintained that Bitcoin cannot dethrone the dollar, citing its extreme volatility and limited use cases for payments as major hurdles.
The Economic Hurdles and Crypto’s Tumultuous Arena
Cryptocurrencies are navigating a landscape filled with worrisome economic signals that could postpone the much-anticipated bull run. As of January, the Producer Price Index climbed to 3.5%, a high unseen since February 2023, while the Consumer Price Index saw inflation at 3%, its peak since that same month.
BTC is now trading at $96,337. Chart: TradingView
Yet, Bitcoin has shown impressive resilience. Daily trading volumes across leading exchanges have soared past $22 billion. Over the last two years, its market cap has ballooned to approximately $2.3 trillion, fueled by hefty institutional investments.
Impact of Monetary Policies
In remarks made on February 11th, Powell reiterated the Fed’s commitment to continue with Quantitative Tightening. This decision, effectively holding off on resuming Quantitative Easing unless faced with dire economic conditions, carries substantial implications for high-risk assets, including cryptocurrencies.
Bitcoin’s Current Position at $96k
At the time of writing, Bitcoin is still hovering above $96,000, with fluctuations between $94,000 and $95,000.
Image credit: Pexels, chart credit: TradingView
