Jerome Powell, chair of the US Federal Reserve, recently dismissed speculation that the Federal Reserve could add Bitcoin to its reserves. At the end of their two-day meeting, Powell stated that the The Fed is not allowed to own Bitcoin and does not wish to be involved in any government initiative to create a reserve of digital assets.
The Bitcoin announcement comes after the Federal Reserve announced rate cuts while also signaling uncertain monetary policies in the coming months. Powell’s announcement came as a surprise as President Donald Trump announced key appointments of crypto-friendly figures. The market reacted immediately Powell’s statement causing the price of Bitcoin to drop by 5.7%. Other major altcoins like XRP also lost value.
Powell rejects plans to add BTC to reserves
Debates over whether it is time to create a Bitcoin reserve gained steam after Donald Trump achieved a victory and another presidency. Trump used Bitcoin and cryptocurrencies as part of his campaign to attract support from cryptocurrency commentators and personalities. And by appointing key pro-cryptocurrency figures to senior government positions and promising to renew the leadership of the SEC, many hope to predict a Bitcoin stockpile soon.
Powell says the Fed can’t hold Bitcoin and isn’t looking to change that
– ST Business Desk (@stbusinessdesk) December 18, 2024
However, Powell has categorically stated that the US banking system cannot hold Bitcoin. He argued that according to the Federal Reserve Act, there are rules about what banks can own and Bitcoin is not included on the list.
He announced that they do not plan to change the law soon and that the decision corresponds to Congress.
Interest in Bitcoin Strategic Reserve Continues to Grow
Despite the Federal Reserve Chairman’s views on Bitcoin as a reserve asset, there has been increasing attention on Bitcoin as a potential reserve asset. During the election, Trump supported the proposal and even suggested that the United States should become the center of cryptocurrency development. Other pro-Bitcoin policymakers, such as Wyoming Senator Cynthia Lummis, have been campaigning for Bitcoin to be considered a reserve. `
Earlier this year, Lummis introduced a bill asking the US Treasury to purchase and add Bitcoin to the reserve. Under the Lummis bill, the US Treasury will adopt a program to purchase 20,000 BTC annually for five years until the reserve contains 1 million tokens.
BTC price down in the last 24 hours. Source: CoingeckoÂ
Bitcoin price falls after Powell statement
The market reacted negatively to Powell’s statement, with The price of bitcoin falling to $100,300, down approximately 5.7% from the previous day’s close. At press time, Bitcoin’s 24-hour trading value is between $98,839 and $105,306.
Other major cryptocurrencies followed Bitcoin’s lead: Ethereum fell 6.8%, Solana 8.1%, and Binance Coin lost 4.6% in value. Dogecoin had the worst performance among major altcoins, falling to $0.348, or a loss of 11%. Additionally, the stock market plummeted following the Federal Reserve official’s statement. The Nasdaq 100 fell 2% and the S&P ended the day with a loss of 1.55%.
Featured image from Pexels, chart from TradingView
