Federal Reserve Chairman Jerome Powell's recent remarks have caused dramatic market fluctuations. As he made it clear that "we are not allowed to own Bitcoin and are not seeking legal changes", the price of Bitcoin fell below $100,000, and many investors regarded it as a major negative for the market. However, is this really a negative signal that cannot be ignored, or is it just part of "disobeying in public but obeying in private"?
Powell's long-term conservative stance
Powell’s comments are nothing new. In fact, his negative views on Bitcoin have been around for a long time:
July 2018: Powell stated at a congressional hearing: 'Bitcoin is primarily a speculative asset, not a currency. There are many issues with it as a means of payment due to its excessive volatility.'
July 2021: In the Federal Reserve's semiannual monetary policy report, Powell mentioned: 'We are not considering Bitcoin or other cryptocurrencies as an option for legal tender. Their volatility makes them unsuitable as a stable payment tool.'
May 2022: Powell reiterated: 'The cryptocurrency market is still very immature. The speculative nature of Bitcoin is evident; its high volatility makes it unsuitable as a payment tool.'
These statements clearly indicate that the Federal Reserve and its chairman Powell do not support Bitcoin as legal tender, but rather view it as a high-risk speculative asset. In Powell's view, Bitcoin's volatility prevents it from being a stable means of payment, and the Federal Reserve's primary function—to maintain the stability and health of the dollar—determines that they do not want to see any cryptocurrency threaten the dollar's position.
Is this really bearish?
Does Powell's statement mean Bitcoin has truly entered a 'bearish' situation? From the market's short-term response, it indeed triggered price fluctuations, and some investors have expressed doubts about Bitcoin's future. However, we need to clearly recognize that Powell's remarks essentially did not provide any new policy information; they are more a repetition of past positions.
In fact, Powell's stance on Bitcoin has remained consistent—he does not believe Bitcoin can replace the dollar and does not support it as legal tender. These statements are not new to the public, and the market has long been accustomed to the Federal Reserve's position. Therefore, interpreting Powell's remarks as 'bearish' may be more about short-term market sentiment fluctuations rather than a fundamental change in policy.
Potential changes in the Trump administration
Compared to Powell's conservative stance, former President Trump's attitude is more open. He publicly stated during his campaign that if re-elected, he would promote Bitcoin as America's 'national reserve' asset. After Trump takes office, he may bring more policy support for Bitcoin, even making it one of the strategic assets of the U.S. economy.
If Trump returns to power in January 2025 and promotes this policy, Bitcoin will no longer be a marginalized asset. Here are some measures that Trump might take:
Treasury Department: Propose to consider Bitcoin as a strategic reserve asset, similar to gold, to diversify the risk of dollar reserves.
Special Fund: Establish an independent fund or institution for purchasing and holding Bitcoin, similar to the operation of foreign exchange reserves, for international trade settlement or value preservation.
Digital Asset Sovereign Fund: Learn from the sovereign wealth funds of other countries to establish a U.S. digital asset fund specifically for investing in and managing Bitcoin and other crypto assets.
Once these measures are implemented, they will significantly enhance the legitimacy of Bitcoin, thereby promoting its market recognition and usage. Trump's support is undoubtedly a major benefit for Bitcoin.
Comparison between Powell and Trump
It is worth noting that Powell himself was appointed as the Federal Reserve Chairman by Trump. Although his stance differs from Trump's, from a longer-term perspective, Trump may bypass Powell's conservative attitude through policy changes after taking office. The arrival of the Trump administration is likely to change the fate of Bitcoin, possibly bringing more policy support and institutional guarantees.
Trump's government framework includes many key figures who are pro-cryptocurrency, such as Elon Musk, Paul Atkins (a cryptocurrency advocate and advisor for $RSR), and David Sacks (former COO of PayPal). These individuals will provide policy support for Bitcoin and other crypto assets, creating conditions for their legalization and mainstream acceptance. Therefore, although Powell's stance may temporarily suppress Bitcoin's market performance, in the long run, the Trump administration has the potential to bring more favorable policies for Bitcoin.
Conclusion
While Powell's remarks have had a short-term impact on the Bitcoin market, this does not mean Bitcoin's future is bleak. Powell's attitude is already known as a 'conservative' position, and the market's reaction should not be over-interpreted. However, the policy changes that Trump and others might bring, especially the proposal to view Bitcoin as a national reserve asset, will undoubtedly open a new policy door for Bitcoin.
Market fluctuations and changes in sentiment are inevitable, but Bitcoin, as a decentralized digital asset, will ultimately be influenced by multiple factors in its development and trends. Whether it's Powell's statements or Trump's potential policies, what will truly impact Bitcoin in the coming years will still be technological advancements and changes in the global economic environment.
