Bitcoin as Gold 2.0? Jerome Powell Weighs In as BTC Hits New Highs

Federal Reserve Chair Jerome Powell has sparked fresh debate over Bitcoin's role in the financial ecosystem, calling it a speculative asset comparable to gold rather than a rival to the U.S. dollar.

Speaking at the New York Times DealBook Summit, Powell remarked that Bitcoin is “just like gold, only virtual” but dismissed it as a functional currency or competitor to the U.S. dollar. Instead, he characterized it as a volatile asset competing with gold in investment portfolios.

Powell’s stance aligns with an ongoing shift among financial institutions toward embracing Bitcoin as "digital gold." This narrative, previously championed by crypto advocates, gains credibility as Bitcoin outpaces gold ETFs in growth and utility.

Powell also dismissed the notion of a national Bitcoin reserve, a Trump campaign promise, emphasizing the Federal Reserve’s priority to maintain the stability and security of the banking system. He reiterated that cryptocurrencies should not pose a risk to financial health, underscoring a cautious regulatory approach.

The remarks also come amid an era of evolving U.S. crypto regulation, with the incoming Trump administration and pro-crypto policymakers like Paul Atkins – slated to take over from Gary Gensler as SEC chair – promising friendlier frameworks.

Reports also indicate that CFTC Commissioner Caroline D. Pham is a leading candidate for the agency's chairmanship, with plans to recalibrate Biden-era enforcement measures. Advocacy for treating cryptocurrencies as emerging asset classes could pave the way for a more innovation-friendly regulatory framework.

Bitcoin’s recent performance has amplified optimism, with a 135% rally in 2024, and it's current price sitting around $103,000.

BRN analyst Valentin Fournier attributed this to favorable macroeconomic conditions, institutional adoption, and widespread acknowledgment of Bitcoin’s legitimacy as a hedge asset.