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Federal Reserve Chair Jerome Powell has drawn parallels between Bitcoin and gold, highlighting its emerging status as a speculative asset.
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Bitcoin has recently exceeded silver’s value, soaring to $102K, yet it still trails behind gold, which commands an impressive $18 trillion market cap.
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Powell acknowledged that while Bitcoin is gaining traction, it remains too volatile to function effectively as a stable currency.
Jerome Powell likens Bitcoin to gold, focusing on its speculative nature and rising value, while noting its volatility as a barrier for mainstream use.
Jerome Powell’s bold Bitcoin stance
As expected, Powell further addressed concerns regarding Bitcoin’s potential threat to the U.S. dollar and the Federal Reserve’s authority. He clarified that despite its growing recognition, BTC does not pose a challenge to the strength of the dollar, as it remains highly volatile and is not widely used as a primary payment method or a stable store of value.
Powell emphasized that while Bitcoin’s role as a digital asset continues to evolve, its volatility limits its reliability in mainstream financial transactions.
He added, “It’s not a competitor for the dollar. It’s really a competitor for gold.”
Are Trump’s pro-crypto plans starting to take shape?
Interestingly, Powell’s comments came as the incoming Trump administration is expected to push for the legalization of digital assets. As we all know, during his campaign, Trump embraced cryptocurrencies, accepting donations in BTC, Ethereum [ETH], Dogecoin [DOGE], and Solana [SOL], and pledging to establish a national Bitcoin reserve.
At the July Bitcoin conference, Trump emphasized the need for the U.S. to become a crypto superpower, or risk falling behind nations like China.
However, Powell reiterated that the Federal Reserve does not see it as its role to regulate the cryptocurrency sector.
When asked about his personal stance on BTC, Powell revealed that, as a government official, “he is not allowed” to own it.
Bitcoin’s recent trends
Following Trump’s election win last month, Bitcoin saw an impressive rally, hitting record highs and briefly surpassing $98,000 before stabilizing. As of the 4th of December, Bitcoin was trading around $96,800, but it didn’t stop there—just recently, it surged past the $100K mark, reaching $102,436.85 after a 6.12% increase in just 24 hours, according to CoinMarketCap.
With a market capitalization of $1.92 trillion, Bitcoin has now surpassed silver, which is valued at $1.75 trillion, making it the eighth most valuable asset globally.
However, it still remains a long way from gold, which holds a market value of nearly $18 trillion.
Conclusion
In summary, Powell’s recent assertions on Bitcoin’s role in the financial ecosystem underscore its growing visibility as a digital asset akin to gold, though its volatility presents a significant impediment in achieving stability as a primary currency. Investors and policymakers alike will be looking closely at the evolving landscape of cryptocurrency as regulatory frameworks develop and digital assets gain broader acceptance.
