Bitcoin’s value took a hit on Wednesday following comments from Federal Reserve Chairman Jerome Powell, who clarified that the central bank has no authority to hold the cryptocurrency. During a press conference, Powell stated, “We’re not allowed to own bitcoin. The Federal Reserve Act specifies what we can own, and we’re not looking for a law change.”
Powell’s remarks addressed queries on the potential benefits of the U.S. amassing bitcoin reserves, an idea suggested by President-elect Donald Trump as a strategy to keep pace with global competitors adopting crypto. Despite the soaring value of bitcoin in recent months, Powell emphasized that any change in the law to allow the Fed to hold bitcoin would be a matter for Congress, not the Fed itself.
The cryptocurrency market reacted swiftly to Powell’s stance, with bitcoin prices dropping over 5% in the afternoon following the announcement. This dip comes in contrast to the bullish trend bitcoin has enjoyed, fueled by Trump’s pro-crypto rhetoric. Since the start of the year, bitcoin has increased by more than 125%, reaching a record high above $108,000 earlier this week, though it was trading at around $101,000 by Wednesday afternoon.
Trump, who has openly advocated for making the U.S. the “crypto capital of the planet and the bitcoin superpower of the world,” has taken steps to support the cryptocurrency industry. He announced in July his intention to create a favorable regulatory environment, launched a new cryptocurrency venture linked to his family in September, and appointed former PayPal executive David Sacks as his “White House A.I. & Crypto Czar.” Additionally, Trump has nominated Paul Atkins, known for his support of cryptocurrency, to lead the Securities and Exchange Commission.
The interplay between regulatory policy, government statements, and market reactions continues to shape the volatile landscape of cryptocurrency, with Powell’s comments adding a layer of caution to investors’ outlook for 2025.
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