Jerome Powell, the chair of the US Federal Reserve, recently addressed speculations surrounding the possibility of the Fed adding Bitcoin to its reserves. Following a two-day meeting, Powell made it clear that the Fed is not permitted to hold Bitcoin and has no intentions of participating in any government initiatives aimed at accumulating digital assets.
The timing of Powell’s statement was noteworthy as it came shortly after the Fed announced rate cuts while hinting at uncertain monetary policies in the near future. This announcement coincided with President Donald Trump appointing individuals with a favorable stance towards cryptocurrencies to key positions within the government. The market quickly reacted to Powell’s remarks, causing Bitcoin’s price to drop by 5.7%, with other major altcoins like XRP also experiencing a decline.
Powell firmly rejected any plans to add Bitcoin to the reserves of the US banking system, citing regulations outlined in the Federal Reserve Act that govern what assets banks are allowed to hold. According to Powell, Bitcoin is not currently included in the list of permissible assets, and he emphasized that any changes to this policy would need to be determined by Congress.
Despite Powell’s stance on Bitcoin as a reserve asset, there has been a growing interest in the idea of incorporating Bitcoin into reserves. During the recent elections, Trump expressed support for this proposal and suggested that the US could become a hub for cryptocurrency innovation. Pro-Bitcoin policymakers, such as Wyoming Senator Cynthia Lummis, have also advocated for Bitcoin to be considered a reserve asset.
Earlier this year, Lummis introduced a bill urging the US Treasury to purchase and include Bitcoin in its reserves. The proposed program would involve acquiring 20,000 BTC annually for five years until the reserve holds a total of 1 million tokens.
Following Powell’s statement, the price of Bitcoin experienced a drop to $100,300, representing a decrease of approximately 5.7% compared to the previous day’s closing price. Other major cryptocurrencies also followed suit, with Ethereum declining by 6.8%, Solana by 8.1%, and Binance Coin by 4.6%. Dogecoin, in particular, suffered a significant loss of 11%, dropping to $0.348. Additionally, the stock market reacted negatively to the Fed official’s remarks, with the Nasdaq 100 falling by 2% and the S&P closing the trading day with a 1.55% loss.
In conclusion, Powell’s dismissal of the possibility of the Fed adding Bitcoin to its reserves has sparked debates and reactions within both the cryptocurrency market and the broader financial landscape. Despite differing opinions on the matter, the interest in Bitcoin as a potential reserve asset continues to gain momentum, with policymakers and market participants closely monitoring developments in this evolving space.
