Powell Sees Bitcoin as Competitor to Gold, Not Dollar, in Current Economic Outlook

• Bitcoin is seen as a competitor to gold, not the dollar.
• Fed monitors cryptos but does not directly regulate them.
• Powell banned from owning cryptocurrencies due to his position.

At the recent New York Times DealBook Summit, Federal Reserve Chairman Jerome Powell discussed Bitcoin’s position in the current economic landscape, comparing it more to gold than the US dollar. According to Powell, Bitcoin is predominantly used as a speculative asset. “It’s like gold, it’s exactly like gold — only it’s virtual, it’s digital,” he said. This virtual and digital nature sets Bitcoin apart from traditional gold, but both serve similar purposes in terms of speculative investment.

Powell stressed that Bitcoin is not being adopted as a form of payment or store of value due to its high volatility. “It’s not a competitor to the dollar; it’s really a competitor to gold,” he emphasized, dismissing the notion that the cryptocurrency could directly challenge the U.S. fiat currency.

The discussion extended to the Federal Reserve’s role in relation to cryptocurrencies. Powell clarified that the Fed’s responsibility is to monitor how digital assets interact with the traditional banking system, but stressed that the central bank does not have a direct regulatory role over these assets.

During the event, when asked about his own participation in the crypto market, Powell revealed that his position at the Fed prevents him from holding any cryptocurrency.

In addition to focusing on cryptocurrencies, Powell also commented on the overall health of the U.S. economy, expressing optimism by describing it as being in “great shape right now.” He noted, however, that economic growth has been more robust than anticipated and that inflation has been slightly higher than initially forecast.

In the context of monetary policy, Powell indicated that the Fed could maintain a cautious stance on interest rate adjustments, considering the robustness of the labor market and the mitigation of economic risks. According to the CME FedWatch tool, there is a 75% expectation for a 25 basis point cut at the next Fed meeting on December 18.