Powell: Bitcoin Competes with Gold, Not the Dollar

The Fed Chairman Jerome Powell spoke about the place of Bitcoin in the global economy during the New York Times DealBook Summit on Wednesday. This Bitcoin news saw a lot of enthusiasm from participants in the crypto space.

During an interview with the financial journalist Andrew Ross Sorkin, Powell tried to clarify the position of the US Federal Reserve and stated that bitcoin should not be viewed as an opponent of the American dollar but as an investment instrument similar to gold.

His remarks helped to shed more light on the position of the Federal Reserve on digital currencies, with him pointing out that Bitcoin is highly volatile and not even used as a medium of exchange or a store of value.

Switching to the macroeconomic situation, Powell looked confidently at the state of the US economy right now. He said that the economy is in

“great shape right now because of high growth rates and a good labour market.”

Bitcoin: A Speculative Asset, Not a Currency

Responding to criticisms that found in Bitcoin the potential of a currency to replace the US dollar, Powell quickly dismissed it by explaining that it functions more as a financial asset or gamble. “It’s like gold, only it’s virtual, it’s digital,” Powell said, which proves Bitcoin’s attraction for investors, not customers.

He said that it is not being used as a medium of exchange or a store of value since its price is highly volatile. This comparison between Bitcoin and gold stems from their shared role as assets used to hedge against inflation.

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However, unlike gold, whose value has remained relatively constant over the years, the value of Bitcoin has been extremely volatile. Thus making BTC a bad store of value. According to Powell in the recent Bitcoin news cycle, Bitcoin is not a threat to the dollar. However, it competes with gold in the digital space.

Bitcoin news: Federal Reserve’s Approach to Digital Assets

Powell also addressed the Federal Reserve’s role in the growing digital asset market, emphasizing that the central bank does not directly regulate cryptocurrencies. Instead, its focus is on monitoring how these assets interact with the broader banking system to ensure financial stability. “We don’t regulate crypto assets,” Powell clarified, highlighting the Fed’s limited jurisdiction over the crypto space.

The Fed does not intervene yet but closely monitors the development of digital assets as many cryptocurrencies affect the global financial markets.

Powell’s remarks come amid broader regulatory uncertainty surrounding digital currencies, with other government agencies and officials debating how to oversee the sector.

When asked if he holds any crypto, Powell said he cannot hold any for that is against the rules for the Federal Reserve Chair.

Bitcoin’s Rising Market Influence

It hit a market capitalization of $1.92 trillion, surpassing other assets. But it remains significantly below the competing commodity like gold which has a market capitalization of almost $18 trillion.

Following Trump’s election win, Bitcoin surged to record highs, briefly surpassing $98,000 before moderating. However, Bitcoin has reclaimed past $100,000 having tried several times to breach the barrier. Bitcoin is currently trading at $102,728 in the last one-day period. This surge comes after Trump nominated Paul Atkins as the next Security and Exchange Commission chair.

“I am delighted to announce the nomination of Paul Atkins to be the next Chairman of the Securities & Exchange Commission. Paul is a proven leader in common sense regulations. He believes in the promise of robust, innovative capital markets that are responsive to the needs of Investors, & that provide capital to make our Economy the best in the World. He also recognizes that digital assets & other innovations are crucial to Making America Greater than Ever before,” he added.