Fed Chair Jerome Powell: Bitcoin Competes with Gold, Not the Dollar

Federal Reserve Chair Jerome Powell recently commented at The New York Times’ DealBook Summit, clarifying that Bitcoin is not a competitor to the U.S. dollar, but rather to gold. Powell described Bitcoin as a speculative asset that shares characteristics with gold, as both are volatile and digital in nature, but neither are widely used as stores of value or mediums of exchange.

While Bitcoin has largely remained stable, Ether (ETH) saw a significant 8% price increase on Wednesday, reaching over $3,880. According to Tom Dunleavy of Master Global, the surge followed the closing of $800 million in short positions. CoinDesk Senior Analyst James Van Straten also attributed the rally to a strong capital inflow, reminiscent of the market dynamics seen during the 2021 bull run.

Bitcoin’s market dominance peaked at 61.85% on November 21 but has since fallen to 54.84%, while Solana’s dominance has also declined. Van Straten explained, “Bitcoin has stayed flat, so Ether is catching up,” which has resulted in strong performances from several altcoins in the CoinDesk 20 Index. Despite Bitcoin’s lackluster performance, the index is up 1.83%, with Ethereum Classic (ETC), Filecoin (FIL), Polkadot (DOT), and Uniswap (UNI) gaining 22%, 18%, 17%, and 16%, respectively, over the past 24 hours.

In his remarks, Powell touched on inflation, stating that the Federal Reserve is taking a cautious approach in its search for fiscal neutrality. When asked whether Bitcoin’s rise was related to fears about the U.S. dollar, Powell emphasized that Bitcoin’s role is not as a rival to the dollar but rather as a speculative asset like gold. He also reaffirmed that the primary focus in integrating cryptocurrency into the financial system is to ensure the stability of the banking system and protect consumers.