Fed Chair Jerome Powell: Bitcoin Competes with Gold, Not the U.S. Dollar
In a recent appearance, Federal Reserve Chair Jerome Powell stated that Bitcoin is competing against gold, not the U.S. dollar, as part of a broader discussion on financial stability and inflation.
Meanwhile, Ether (ETH), which had been trailing Bitcoin (BTC) for much of the year in terms of price action, saw significant gains on Wednesday. The second-largest cryptocurrency rose by 8%, climbing to over $3,880 in just 24 hours. This surge was fueled in part by the closure of $800 million worth of short positions, according to Tom Dunleavy, a partner at Master Global. Additionally, CoinDesk Senior Analyst James Van Straten highlighted that Ether is benefiting from a capital influx reminiscent of the 2021 bull market.
Bitcoin’s dominance, which had reached a peak of 61.85% on November 21, has since dropped to 54.84%, Van Straten noted. Solana’s dominance has also fallen. “Bitcoin has remained flat, so Ether is catching up,” Van Straten explained. This shift in market dynamics has contributed to the strong performance of many altcoins in the CoinDesk 20, an index of the top 20 cryptocurrencies. While the index as a whole is up 1.83% today, weighed down by Bitcoin’s modest 1.52% gain, several altcoins have surged. Ethereum Classic (ETC), Filecoin (FIL), Polkadot (DOT), and Uniswap (UNI) have risen by 22%, 18%, 17%, and 16%, respectively, over the past 24 hours.
Despite the market movements, Bitcoin didn’t show a strong reaction to Powell’s comments at The New York Times’ DealBook Summit. Powell briefly addressed inflation, saying the U.S. central bank can act cautiously in its search for fiscal neutrality. When CNBC host Andrew Ross Sorkin asked if Bitcoin’s rise was linked to concerns over the U.S. dollar, Powell responded, “People use Bitcoin as a speculative asset. It’s like gold, only it’s virtual, it’s digital. People aren’t using it as a form of payment or as a store of value. It’s highly volatile. It’s not a competitor for the dollar, it’s really a competitor for gold.”
Powell also reiterated that in the integration of crypto into the financial system, the priority remains to safeguard the health and stability of the banking system, alongside ensuring consumer protection.
