Federal Reserve Chair Backs Bitcoin As ‘Digital Gold’—A Turning Point For Crypto?

Despite the challenging macroeconomic environment, Federal Reserve chairman Jerome Powell has revised his stance on Bitcoin, which has given investors cautious hope for cryptocurrencies.

Comparing Bitcoin to gold during an appearance at the New York Times DealBook Summit, Powell characterized the flagship crypto as a “speculative asset” rather than a direct competitor to the US dollar.

This is a significant departure from his previous dismissive stance toward the world’s largest cryptocurrency, which has a market capitalization of approximately $1.4 trillion.

Powell’s Changing Viewpoint On Bitcoin

Binance founder Changpeng Zhao (CZ) promptly emphasized this development as “an improvement to the previous narrative,” indicating that industry leaders were aware of Powell’s rhetorical shift.

That’s an improvement to the previous narrative. Baby steps… https://t.co/4F95yEbnp5

— CZ BNB (@cz_binance) February 15, 2025

The specific characterization of Bitcoin as “like gold only… virtual… digital” by Powell implies a growing adoption of cryptocurrencies within traditional financial frameworks.

What Jerome Powell thinks about Bitcoin

Bitcoin is digital gold. It’s not here to replace the dollar, but a strong competitor to gold. pic.twitter.com/AwbeCCQ15I

— Kashif Raza (@simplykashif) February 15, 2025

Despite this, he stated that Bitcoin is unable to challenge the supremacy of the dollar because of its highly volatile nature and its limited use as a payment method.

Economic Constraints & The Challenging Crypto Landscape

The cryptocurrency market currently operates against a backdrop of concerning economic indicators that threaten to delay the anticipated bull cycle.

In January, the Producer Price Index (PPI) reached its highest level since February 2023 at 3.5%, while the Consumer Price Index (CPI) showed a 3% increase in inflation, marking its highest level since February 2023.

Despite these challenges, Bitcoin has been remarkably resilient; on major exchanges, 24-hour trade volumes have topped $22 billion. The market value of the cryptocurrency market has increased to about $2.3 trillion over the past two years as a result of significant institutional investment.

Powell’s comments on February 11th reaffirmed the Federal Reserve’s dedication to Quantitative Tightening (QT) while resisting the reimplementation of Quantitative Easing (QE) until under severe economic circumstances. This position has considerable ramifications for risk assets such as cryptocurrencies.

Bitcoin was selling above $96,000 at the time of this writing. It had been moving between $94,000 and $95,000.

Featured image from Pexels, chart from TradingView