Jerome Powell, chairman of the US Federal Reserve, recently dismissed speculation that the Fed might add Bitcoin to its reserves. At the end of the two-day meeting, Powell stated that The Fed cannot own Bitcoin and does not want to engage in any government initiative to create a stockpile of digital assets.
Bitcoin’s announcement follows the Fed’s announcement of interest rate cuts, while also signaling uncertain monetary policy over the next few months. Powell’s announcement came as a surprise as President Donald Trump announced key appointments of cryptocurrency-friendly figures. The market reacted immediately Powell’s statement causing the price of Bitcoin to drop by 5.7%. Other top altcoins like XRP are also losing value.
Powell rejects plans to add BTC to reserves
Debates over whether it’s time to build a Bitcoin stockpile have gained momentum after Donald Trump secured victory and another presidency. Trump used Bitcoin and cryptocurrencies as part of his campaign to drum up support from cryptocurrency figures and commentators. With the appointment of key cryptocurrency-friendly figures to top government positions and the promise of a reorganization of SEC leadership, many expect to predict Bitcoin stocks soon.
Powell says the Fed cannot hold Bitcoin and is not trying to change that https://t.co/72RQGK1Q6K
— ST Business Desk (@stbusinessdesk) December 18, 2024
However, Powell categorically stated that the US banking system cannot hold Bitcoin. He argued that in accordance with the above-mentioned Federal Reserve Act, there are rules governing what banks can own, and Bitcoin is not included in the list.
He announced that they do not intend to change the law anytime soon and the decision rests with Congress.
Interest in the Bitcoin Strategic Reserve continues to grow
Despite the Fed Chairman’s views on Bitcoin as a reserve asset, increasing attention is being paid to Bitcoin as a potential reserve asset. During the election, Trump supported this proposal and even suggested that the US should become the center of cryptocurrency development. Other pro-Bitcoin policymakers, such as Wyoming Senator Cynthia Lummis, have campaigned for Bitcoin to be recognized as a reserve. `
Earlier this year, Lummis submitted a request to the U.S. Treasury to purchase and add Bitcoin to the reserve. Under the Lummis Act, the US Treasury will adopt a program to purchase 20,000 BTC per year for five years until there are 1 million tokens in the reserve.
BTC price down in the last 24 hours. Source: Coingecko
Bitcoin price falls after Powell’s statement
The market reacted negatively to Powell’s statement, including: Bitcoin price dropped to $100,300, down approximately 5.7% from the previous day’s close. At the time of publication, Bitcoin’s 24-hour trading volume is between $98,839 and $105,306.
Other top cryptocurrencies followed Bitcoin’s lead, with Ethereum falling 6.8%, Solana falling 8.1% and Binance Coin losing 4.6%. Dogecoin was the worst performer among the top altcoins, falling to $0.348, a loss of 11%. Stock markets also fell after the Fed representative’s comments. The Nasdaq 100 index fell 2%, and the S&P ended the trading day with a loss of 1.55%.
Featured image from Pexels, chart from TradingView
