Jerome Powell, the head of the Federal Reserve, recently changed his tune on Bitcoin, giving crypto investors a little boost of hope. Speaking at the New York Times DealBook Summit, he compared Bitcoin to gold, calling it a “speculative asset” but not a threat to the US dollar. This is a big shift from his previous less-than-enthusiastic views on the world’s biggest cryptocurrency (worth about $1.4 trillion).
Powell’s Changing Perspective
Binance CEO Changpeng Zhao (CZ) even commented on this shift, calling it “an improvement to the previous narrative.” Powell’s description of Bitcoin as “like gold, only…virtual…digital” suggests that traditional finance is starting to accept cryptocurrencies.
However, Powell also pointed out that Bitcoin can’t replace the dollar because it’s super volatile and not widely used for payments.
Tough Times for Crypto?
The crypto market is facing some headwinds right now. Inflation is up (both the Producer Price Index (PPI) and Consumer Price Index (CPI) hit their highest points since February 2023), which could slow down the expected crypto market boom. Despite this, Bitcoin’s doing surprisingly well, with daily trading volumes over $22 billion on major exchanges. The overall crypto market has also grown to around $2.3 trillion in the last two years thanks to big investments from institutions.
The Fed’s Plan
Powell also reiterated the Fed’s commitment to reducing the money supply (Quantitative Tightening or QT) and avoiding increasing it again (Quantitative Easing or QE) unless the economy gets really bad. This is important because it affects risky investments like cryptocurrencies.
Bitcoin’s Current Price
At the time of writing, Bitcoin was trading above $96,000, after bouncing around between $94,000 and $95,000.
