Powell Opposes Bitcoin Reserve Strategy And Denies Central Bank Permission To Hold BTC

Bitcoin (BTC) dipped below the $100,000 threshold on Wednesday evening, following remarks by the U.S. Federal Reserve Chair Jerome Powell, who opposed the idea of creating a national Bitcoin reserve. Bitcoin had been above the $100,000 mark for much of the past week, during which it reached a new all-time high of over $108,000.

The U.S. stock market also saw a significant decline on Wednesday. The Dow Jones Industrial Average dropped 2.58%, the Nasdaq Composite fell by 3.56%, and the S&P 500 Index lost 2.95%, as reported by MarketWatch.

No Plans To Change

Besides Bitcoin, several altcoins also experienced significant losses on Wednesday, with ETH declining by 6.5% and XRP plummeting by 12.64%. The GMCI 30 index, which tracks the performance of the top 30 cryptocurrencies, saw a drop of 7.18% in the past 24 hours.

The recent surge for Bitcoin was partly driven by comments by the U.S. President-elect Donald Trump, who reaffirmed his plan to establish a national strategic Bitcoin reserve. Additionally, various U.S. states, such as Texas, Pennsylvania, and Florida, have proposed bills to create state-backed Bitcoin reserves, further boosting optimism among traders.

However, Powell, speaking at a press conference on Wednesday, stated that the central bank is not permitted to hold Bitcoin and that there are no plans to seek a law change regarding a U.S. government Bitcoin reserve.

Expectations Vs Reality

Arthur Hayes, former CEO of BitMEX and current Chief Investment Officer of Maelstrom, expects a significant sell-off in the crypto market in January, as investors begin to realize the gap between expectations and reality.

Hayes believes the market will quickly adjust to the reality that Trump has, at most, one year to push through any policy changes after January 20th. This realization could trigger a sharp sell-off in crypto and other Trump-related investments.

While the Federal Open Market Committee (FOMC) decided to lower interest rates by 25 basis points on Wednesday, Powell indicated that interest rate cuts would likely slow in the coming year, noting that the decision to cut rates was a closer call than the financial markets had anticipated.