- U.S. Fed Chairman Jerome Powell spoke about digital currency plans in an online event.
- Powell’s comments on Bitcoin’s volatility, energy requirements and private issuance caused a drop its price.
- The Fed chair seemed slightly comfortable with stablecoins, but was not too optimistic about their role in future payments.
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The U.S. Fed chairman Jerome Powell said that Bitcoin is a speculative asset like gold and does not see it as a replacement for the American dollar. And certainly not a digital dollar.
Fed Not Worried About Bitcoin
Powell spoke at the Innovation Summit by the Bank of International Settlements (BIS). The online conference’s most pressing issues were the rise of Bitcoin, the digital dollar plans, and stablecoins.
On Bitcoin, Powell said that BTC is a “speculative asset,” with no backing, and more a substitute for gold than the dollar. He addressed the risks of holding crypto assets due to their volatility and energy requirements for mining. He added,
“Crypto-assets—see Bitcoin—are highly volatile and therefore, not useful as a store of value. They are not backed by anything, they’re more of an asset for speculation.”
Despite drawing comparisons with gold, Powell’s comments failed to instill growth sentiments in the market.
Federal Reserve Chairman, “Bitcoin is a substitute for gold” pic.twitter.com/tiiduHVK2D
— Documenting Bitcoin 📄 (@DocumentingBTC) March 22, 2021
Powell’s emphasis on the dollar’s strength against “private cryptocurrencies” sparked a negative reaction in the market.
He said that private offerings like Bitcoin have tried to supplement the national fiat currency but have been a failure so far. The distinction between government-issued currencies and privately-issued cryptocurrencies caused bearish momentum in the leading asset’s price.
Bitcoin dropped to lows of $56,500 this morning after Powell’s address. The cryptocurrency failed to break above the $60,000…