As reported by Yahoo! Finance, in a decisive announcement during a press conference on December 19th, Federal Reserve Chair Jerome Powell categorically dismissed the notion of the central bank adding Bitcoin to its balance sheet, citing legal restrictions inherent to the Federal Reserve Act.
Powell made it clear that the Federal Reserve is not contemplating any legislative modifications to facilitate such a change. “We’re not allowed to own Bitcoin. The Federal Reserve Act says what we can own, and we’re not looking for a law change," he stated emphatically. "That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed."
Following Powell's remarks and a more tempered stance from the Federal Reserve, Bitcoin experienced its first decline in four days, dropping by 5.9% to $100,605. This downturn followed its record high of $108,000, reached just the day before, on December 18th.
The ripple effects extended throughout the global cryptocurrency market, which saw its capitalization dip to $3.67 trillion—a significant 7.6% decrease in just 24 hours. The downturn was widespread, affecting major cryptocurrencies, with Ethereum, XRP, and Solana experiencing losses between 4% and 11%, indicative of a broader market correction.
In a notable move for monetary policy, the Federal Reserve reduced interest rates by a quarter-point on Wednesday, adjusting the target range to 4.25%-4.5%. This announcement resonated through the stock markets as well; the S&P 500 and Nasdaq Composite both fell by 0.4%, while the Dow Jones Industrial Average lost approximately 100 points, marking its tenth consecutive losing day.
Powell further explained that the central bank's rate policy is now “significantly less restrictive” following a total reduction of a full percentage point from its previous high. He indicated that any future rate cuts in 2025 would hinge on forthcoming economic data, particularly concerning inflation and labor market stability.
In a parallel development, President-elect Donald Trump has renewed his commitment to a strategic Bitcoin reserve, a proposal he initially introduced during his campaign. On December 12th, Trump proclaimed, “We’re gonna do something great with crypto because we don’t want China, or anybody else … but others are embracing it, and we want to be ahead.”
Currently, the U.S. government possesses 212,847 Bitcoin, valued at approximately $22.3 billion, acquired through law enforcement seizures. However, it remains uncertain whether Trump's envisioned reserve would include these existing holdings or if it would necessitate additional purchases from the market.
Trump has been a staunch advocate for recognizing Bitcoin as a strategic asset, asserting his intention to align the United States competitively against countries like China in the cryptocurrency landscape. As speculation mounts, many anticipate that an executive order might soon formalize Bitcoin's status as a reserve asset once Trump assumes office on January 20th, 2025.
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