Jerome Powell Compares Bitcoin to Gold, Dismisses Dollar Competition

Jerome Powell's Take on Bitcoin

Federal Reserve Chair Jerome Powell shared his insights on Bitcoin (BTC) during the DealBook Summit, emphasizing that the cryptocurrency is more similar to gold than to the U.S. dollar.

“People use Bitcoin as a speculative asset. It’s like gold—it’s just virtual and digital,” Powell stated.

Bitcoin's Role in the Economy

Powell clarified that Bitcoin does not undermine the Federal Reserve or the strength of the dollar. He pointed out that the volatility of Bitcoin prevents it from being a reliable store of value or a primary form of payment.

“It’s not a competitor for the dollar. It’s really a competitor for gold,” he noted.

Regulation and Ownership

When asked about a potential national Bitcoin reserve, Powell reiterated the Fed's commitment to a safe and sound banking system, asserting that the interaction between cryptocurrency and traditional finance should not jeopardize the latter's stability. He also mentioned that it is not the Fed’s role to regulate the cryptocurrency industry and, when questioned about his own Bitcoin ownership, he stated he is “not allowed” to own it.

Economic Outlook

In addition to discussing Bitcoin, Powell commented on the state of the U.S. economy, describing it as being in remarkably good shape with stable growth and decreasing inflation. He highlighted that the economy is growing at about 2.5% annually with inflation dropping from over 7% to around 2.3%, maintaining steady unemployment rates. This stability allows the Fed to take a cautious approach towards reaching a neutral interest rate level, balancing the risks of inflation and labor market impacts.