Jerome Powell, head of the US Federal Reserve, recently poured cold water on the idea of the Fed adding Bitcoin to its reserves. He made it clear that the Fed isn’t allowed to own Bitcoin and has no plans to change that.
Powell’s Firm Stance
This announcement came right after the Fed announced interest rate cuts and hinted at uncertain economic policies in the coming months. It was a bit surprising, especially considering President Trump’s appointments of several crypto-friendly figures. Powell’s statement caused a noticeable market reaction, with Bitcoin’s price dropping by about 5.7%. Other major cryptocurrencies also saw their values fall.
Powell emphasized that current laws prevent the Fed from holding Bitcoin. He said changing that would be up to Congress.
Continued Interest in Bitcoin as a Reserve Asset
Despite Powell’s rejection, there’s still a lot of interest in using Bitcoin as a national reserve asset. This interest grew during the election, fueled by Trump’s support for crypto and proposals to make the US a crypto hub. Other politicians, like Senator Cynthia Lummis, have actively pushed for Bitcoin’s inclusion in US reserves. Lummis even proposed a bill that would have the US Treasury buy 20,000 Bitcoins annually for five years.
Market Reaction: Bitcoin and Beyond
Powell’s statement sent shockwaves through the market. Bitcoin’s price plummeted to around $100,300, a roughly 5.7% drop. Other major cryptocurrencies like Ethereum, Solana, and Binance Coin also experienced significant losses. Dogecoin took the biggest hit, falling by 11%. The broader stock market also felt the impact, with the Nasdaq 100 and S&P 500 experiencing declines.
