Powell Acknowledges Bitcoin’s Gold-Like Status
U.S. Federal Reserve Chair Jerome Powell has sparked optimism in the cryptocurrency market by likening Bitcoin [BTC] to gold, signaling a potential shift in the Fed’s stance on digital assets.
His evolving perspective was recently highlighted by Binance [BNB] founder Changpeng Zhao (CZ), who noted Powell’s softened approach toward Bitcoin compared to his previous cautious stance.
CZ Applauds Powell’s Changing Outlook on Bitcoin
Speaking at the New York Times DealBook Summit, Powell stated:
“People use Bitcoin as a speculative asset, right? It’s like gold. It’s just like gold only. It’s virtual. It’s digital. People are not using it as a form of payment or as a store of value. It’s highly volatile. It’s not a competitor for the dollar. It’s really a competitor for gold.”
Responding to this, CZ commented:
“That’s an improvement to the previous narrative. Baby steps…”
Despite recognizing Bitcoin’s potential as a store of value, Powell maintains that BTC’s volatility and limited mainstream adoption prevent it from competing with the U.S. dollar as a viable payment method.
Macroeconomic Challenges Impacting Crypto Markets
The broader macroeconomic environment has placed further strain on risk assets, including cryptocurrencies. Recent U.S. Consumer Price Index (CPI) data showed inflation rising to 3% in January, while the Producer Price Index (PPI) climbed to 3.5%, its highest level since February 2023.
With inflationary pressures mounting and the Federal Reserve delaying interest rate cuts, the anticipated crypto bull cycle has faced obstacles. However, as the week progressed, Bitcoin and other cryptocurrencies displayed resilience, fueling speculation about potential market rebounds.
What Powell’s Stance Means for Bitcoin’s Future
Powell has reinforced his commitment to Quantitative Tightening (QT) while rejecting the possibility of renewed Quantitative Easing (QE), except under extreme economic conditions like near-zero interest rates. This stance has intensified discussions within the crypto community regarding Bitcoin’s long-term trajectory.
While some investors view this as a necessary approach to maintaining economic stability, others worry that it could extend the uncertainty surrounding Bitcoin’s next major rally.
With inflation still above target and interest rate cuts off the table, the crypto market faces ongoing challenges. However, Powell’s evolving view of Bitcoin as a store of value continues to generate optimism, leaving investors speculating on how future monetary policies could shape the digital asset landscape.
