Even with the tough economic situation, Federal Reserve Chairman Jerome Powell has changed his view on Bitcoin, giving some hope to cryptocurrency investors.
During an event at the New York Times DealBook Summit, Powell compared Bitcoin to gold, calling it a “speculative asset” instead of a direct rival to the US dollar. This is a big change from his earlier negative view of Bitcoin, which is worth about $1.4 trillion in total.
Powell’s Changing Viewpoint On Bitcoin
Binance founder Changpeng Zhao (CZ) quickly pointed out that Jerome Powell’s new comments on Bitcoin were “an improvement to the previous narrative,” suggesting that leaders in the industry noticed Powell’s change in tone.
He shared this on Twitter, saying, “That’s an improvement to the previous narrative. Baby steps…” Powell had compared Bitcoin to gold, calling it “virtual” and “digital,” which hints that cryptocurrencies are slowly being accepted in traditional financial systems.
However, Powell also said that while Bitcoin is like digital gold, it can’t replace the dollar because of its unpredictable price and limited use for payments.
Economic Constraints & The Challenging Crypto Landscape
The cryptocurrency market is facing tough economic conditions that could delay the expected rise in prices. In January, the Producer Price Index (PPI) hit its highest level since February 2023, reaching 3.5%. At the same time, the Consumer Price Index (CPI) showed a 3% increase in inflation, which is also the highest it has been since February 2023.
Despite the tough economic situation, Bitcoin has shown strong resilience. On major exchanges, daily trading volumes have topped $22 billion. The total value of the cryptocurrency market has grown to about $2.3 trillion over the last two years, thanks to big investments from institutions.
Monetary Policy Decisions
Powell’s comments on February 11th confirmed that the Federal Reserve is sticking with Quantitative Tightening (QT) and will not bring back Quantitative Easing (QE) unless the economy faces serious issues. This decision could affect riskier assets like cryptocurrencies.
Bitcoin Still Around $96k
At the time of writing, Bitcoin was priced above $96,000, moving between $94,000 and $95,000.
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