The changing perspective of U.S. Federal Reserve Chair Jerome Powell on Bitcoin [BTC] has rekindled hope in the cryptocurrency market.
In addition, Changpeng Zhao (CZ), the founder of Binance [BNB], recently highlighted Powell’s shifting view, representing a departure from his prior cautious stance towards BTC.
CZ commends Powell’s altered position
During a conversation with Andrew Ross Sorkin at the New York Times DealBook Summit, Powell mentioned,
“Individuals consider Bitcoin a speculative asset, correct? It resembles gold. It’s similar to gold. It’s virtual. It’s digital. People are not using it for transactions or as a method to preserve wealth. It’s extremely volatile. It’s not in competition with the dollar. Instead, it’s competing with gold.”
Observing this change in stance, Zhao remarked,
“That represents progress from the earlier narrative. Baby steps…”
Nevertheless, despite Powell recognizing Bitcoin’s potential as a store of value, he maintains that BTC cannot challenge the U.S. dollar due to its high volatility and limited usage as a payment mode.
Present macroeconomic scenario
Meanwhile, the broader macroeconomic environment has increased pressure on risky assets, including cryptocurrencies.
The most recent U.S. Consumer Price Index (CPI) report revealed inflation climbing to 3% in January, while the Producer Price Index (PPI) soared to 3.5%, reaching its highest point since February 2023.
With inflationary concerns escalating and the Federal Reserve postponing interest rate cuts, the anticipated bullish cycle in crypto appears to have encountered obstacles.
However, towards the end of the week, cryptocurrency prices displayed signs of resilience, sparking speculation about potential market recoveries.
Implications for Bitcoin’s future
In reality, Powell’s firm opposition to restarting Quantitative Easing (QE) and commitment to continuing Quantitative Tightening (QT) have stimulated discussions within the cryptocurrency community.
His testimony on the 11th of February affirmed that the Fed would only contemplate QE under extraordinary circumstances, like near-zero interest rates, making any policy shift unlikely in the short term.
While some view this as a prudent strategy to uphold economic stability, others are concerned it could prolong the uncertainty surrounding Bitcoin’s next significant upswing.
As inflation remains above the target and interest rate cuts are ruled out, the crypto market is facing a challenging road ahead.
Nonetheless, Powell’s evolving perspective on Bitcoin as a value store continues to inspire optimism, prompting investors to speculate on how forthcoming monetary decisions may influence the digital asset landscape.