Fed's Powell has just said: bitcoin is used as a speculative asset and it is a competitor with gold, not the US dollar

Fed's Powell has just said: bitcoin is used as a speculative asset and it is a competitor with gold, not the US dollar.

At the New York Times DealBook Summit in Manhattan on Wednesday, Federal Reserve Chair Jerome Powell characterized Bitcoin as a speculative asset similar to gold rather than a functional currency.

Key Comments:

“Bitcoin is just like gold, only it’s virtual,” Powell said. “People are not using it as a form of payment or a stable store of value. It’s highly volatile. It’s not a competitor to the dollar; it’s really a competitor to gold.”

Powell’s remarks come as the incoming administration of President-elect Donald Trump is expected to take steps toward legitimizing digital assets. During his campaign, Trump branded himself as the "crypto candidate," accepting campaign contributions in cryptocurrencies such as Bitcoin, Ether, Dogecoin, and Solana.

Trump’s Crypto Agenda:

• At a Bitcoin conference in July, Trump pledged to establish a national Bitcoin reserve, emphasizing his vision for the U.S. to become a global leader in cryptocurrency or risk falling behind rivals like China.
• Following Trump’s election victory, Bitcoin hit a series of record highs, recently peaking at $98,000 before stabilizing around $96,800 as of Wednesday afternoon. Many in the crypto community are optimistic it could breach the $100,000 mark by year’s end.

Market Position:

• Bitcoin’s market capitalization has reached $1.92 trillion, surpassing silver’s $1.75 trillion to become the eighth most valuable asset globally. However, it remains far behind gold, which boasts a market value of nearly $18 trillion.

Powell’s Personal Stance and Fed Policy:

When asked if he personally owns cryptocurrency, Powell replied succinctly: “Not allowed to.”
He declined to comment directly on whether the Federal Open Market Committee (FOMC) would implement a third consecutive interest rate cut at its upcoming meeting on December 17–18. However, Powell did acknowledge that inflation is running hotter than the central bank had projected.

“Growth is definitely stronger than we thought, and inflation is coming in a little higher,” Powell said. “The good news is that we can afford to be more cautious as we try to find a neutral policy stance.”

Inflation and Rate Hikes:

The Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, rose 2.3% year-over-year and 0.2% month-over-month in October. Core PCE, which excludes food and energy prices, climbed 2.8%. While inflation continues to edge closer to the Fed’s 2% target, concerns persist about the pace of progress.

Fed Governor Christopher Waller remarked on Monday that while he leans toward supporting a December rate cut, he’s concerned that inflation improvements may be plateauing.

“I feel like an MMA fighter who keeps inflation in a chokehold, waiting for it to tap out, yet it keeps slipping out of my grasp at the last minute,” Waller said at the American Institute for Economic Research Monetary Conference.

The Federal Reserve’s policy decisions and evolving inflation data remain key factors in shaping market expectations for the months ahead.