Key Points
- U.S. Federal Reserve Chair Jerome Powell acknowledges Bitcoin as a store of value, but not a competitor to the dollar.
- Current macroeconomic conditions and Powell’s stance on Quantitative Easing add pressure to Bitcoin’s potential rally.
U.S. Federal Reserve Chair Jerome Powell’s changing perspective on Bitcoin has generated renewed optimism in the crypto world.
His previous cautious approach towards Bitcoin has shifted, a change that was recently highlighted by Binance founder Changpeng Zhao (CZ).
Powell’s Perspective on Bitcoin
In a conversation with Andrew Ross Sorkin at the New York Times DealBook Summit, Powell compared Bitcoin to gold, seeing it as a speculative asset rather than a form of payment or a store of value.
He also stated that Bitcoin is not a competitor for the dollar due to its high volatility and limited adoption.
CZ commended Powell’s shift in stance, calling it an improvement to the previous narrative.
Despite Powell’s recognition of Bitcoin’s potential as a store of value, he insists that it cannot rival the U.S. dollar.
Impact of Macroeconomic Conditions
The broader macroeconomic landscape is putting pressure on risk assets, including crypto.
The recent U.S. Consumer Price Index (CPI) report revealed that inflation rose to 3% in January, while the Producer Price Index (PPI) surged to 3.5%.
As a result of these inflationary pressures and the Federal Reserve’s delay in rate cuts, the anticipated crypto bull cycle appears to have hit a snag.
Powell’s firm stance against renewed Quantitative Easing (QE) and commitment to Quantitative Tightening (QT) has sparked discussions within the crypto community.
His testimony on February 11 confirmed that the Fed would only consider QE under extreme conditions, making any policy change unlikely in the near future.
This has led to speculation about the potential impact of future monetary decisions on the digital asset landscape.