Key Takeaways
- Jerome Powell, the Federal Reserve Cheif has confirmed that the Central Bank will not hold digital currency signaling a cautious approach to investments.
- President Donald Trump has initiated a Strategic Bitcoin Reserve, to which Powell emphasized that there is no intention of such a move by the Fed.
- The Bitcoin price decreased after Powel’s press conference. The price of BTC dropped by 5%.
- The overall market sentiments were affected after the press conference of Jerome Powell. Ethereum reduced by 4%, XRP declined by 11% and Solana (SOL) by 8.1%. Dogecoin (DOGE) performed the least among the top 10 positioned tokens.
- The impact of the press conference was reflected in the stock market as well. The stock market reacted negatively with the S&P 500 closing with a loss of 1.55%. Nasdaq 100 has also declined around 2%.
Jerome Powell is one of the most powerful names within the crypto community. He is an American investment banker and the 16th Chair of the Federal Reserve. He leads the central bank that determines the US monetary policies and his statements are known to have a significant impact on cryptocurrency projects.
Following Jerome Powell’s remark, the value of Bitcoin has significantly dropped. He stated that the Fed is prohibited from holding Bitcoin and confirmed that the policy would not undergo any subsequent changes. The press conference was conducted on December 18, 2024. President Mr Trump has proposed an initiative to create a Strategic Bitcoin Reserve. Jerome Powell has confirmed that the Fed has no intention of such a reserve.
During his press conference on Wednesday Powell stated “We’re not allowed to own Bitcoin. The Federal Reserve Act says what we can own, and we’re not looking for a law change” While asked about the plan of government authorities on the initiation of Strategic Bitcoin Reserve, Powell confirmed, “That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.”
Powell clarified that any potential changes related to holding Bitcoin by the Fed should be addressed by Congress, as such legal amendments will not be addressed by the Fed. He reflected the ownership of cryptocurrencies is restricted as per the Federal Reserve Act. The idea of building a strategic reserve for Bitcoin was floated by Donald Trump to stay ahead in cryptocurrency adoption. The current government supports the adoption and utility of cryptocurrency.
Market Sentiments Following Powell’s Statement
The price of Bitcoin has significantly dropped after the statement from Jerome Powell declaring the disinterest of the Fed in integrating Trump’s Strategic Bitcoin Reserve proposal. The value of Bitcoin has declined by 5%. The highest value of BTC reached its all-time high of $108,000 a few days earlier. The future of the token was on the promising side of the crypto landscape before the announcement was made. This marks the major decline of BTC in the past four days.
The take of the Trump government has significantly contributed to the wide acceptance of cryptocurrencies. It is amid the popularity of cryptocurrency projects that the decline was noticed. The overall market sentiments reflected a downward trend following Powell’s conference. Ethereum declined by 4%, while XRP noted a downturn of 11%.
The sudden decline of cryptocurrency projects showcases the significance of the Federal Reserve in determining the value of cryptocurrencies. The overall cryptocurrency market fall includes Solana (SOL) by 8.1%, and Binance Coin (BNB) by 4.6%. Dogecoin performed the least among other tokens.
The stock market also reflected negatively post the comments. The Nasdaq 100 declined around 2% and the S&P closed after a decline of 1.55%. The reaction of the market indicates the prominence of government policies within digital financial institutions. The statement of Jerome Powell resulted in uncertainty among inventors contributing to the overall fall of the market. The investors immediately adjusted their position by selling.
What does the Future Hold?
The power of decision-making regarding holding of the Bitcoin was left for the congress to amend. The current rules of the bank prevent it from holding Bitcoin as it is not a part of the Bank’s policy. The Federal Reserve will not be making any amendments. Over the past 24 hours, BTC has declined by 5.7% which dropped by $100,300. During the time of the press release, Bitcoin was trading at $100,740.
The regulatory updates and government policies have a major impact on determining the positioning of cryptocurrencies. The market indicators after Powell’s statement highlight the volatile nature of the cryptocurrency market. Despite the recent fall, some analysts believe that Bitcoin possesses the potential to maintain a higher price in the future. Once the market stabilizes, more long-term investors will be attracted to the project. As the crypto market evolves into a strong regulatory framework, the value trajectory of digital assets will escalate.
