Even though the economy is going through a rough patch, Federal Reserve Chairman Jerome Powell seems to be warming up to Bitcoin—giving crypto investors a small but hopeful boost.
At the recent New York Times DealBook Summit, Powell said that Bitcoin is more like gold—a “speculative asset”—than a threat to the U.S. dollar. This marks a major shift from his earlier negative views on cryptocurrencies. Right now, Bitcoin’s market value stands at about $1.4 trillion, showing just how big the crypto world has become.
Powell’s New Tone on Bitcoin
Changpeng Zhao (CZ), the founder of Binance, quickly took to Twitter to highlight this change. He called Powell’s latest comments an “improvement to the previous narrative,” adding “Baby steps…” to suggest that while it’s not a full endorsement, it’s still progress.
Powell referred to Bitcoin as “virtual” and “digital gold,” which hints that traditional financial leaders may slowly be starting to accept crypto’s role in the global economy.
Still, Powell made it clear that Bitcoin can’t replace the dollar—mainly because its price swings too much and it’s not widely used for everyday payments.
Economic Struggles Still Weigh on Crypto
The crypto market isn’t having the easiest time either. Inflation is high, and that’s putting pressure on everything, including digital currencies. In January, the Producer Price Index (PPI) rose by 3.5%, its highest since February 2023. Meanwhile, the Consumer Price Index (CPI) went up by 3%—also the highest since early 2023.
Despite this, Bitcoin has held strong. Daily trading volumes recently crossed $22 billion on major exchanges. And over the last two years, the entire crypto market has grown to around $2.3 trillion, thanks in large part to big investments from institutional players like BlackRock and Fidelity.
Fed’s Monetary Policies Could Affect Crypto
On February 11, Powell confirmed that the Federal Reserve will continue with Quantitative Tightening (QT)—a policy that slows down money flow in the economy. He also said they wouldn’t bring back Quantitative Easing (QE) unless things get really bad. That’s important because policies like QT usually make investors more cautious, especially when it comes to risky assets like cryptocurrencies.
Bitcoin Holding Strong Above $96,000
Even with all these economic challenges, Bitcoin has managed to stay strong. At the time of writing, it’s priced above $96,000, moving between $94,000 and $95,000. That’s a huge jump compared to just a few years ago—back in 2020, Bitcoin was trading around $10,000.
