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While cryptocurrency fans like to float Bitcoin as a possible replacement for the U.S. dollar, Federal Reserve Chair Jerome Powell doesn’t quite see it that way.
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Speaking at The New York Times ( NYT +1.19% ) DealBook Summit in Manhattan Wednesday, the central banker said Bitcoin is a speculative asset like gold, rather than something comparable to a currency.
“It’s just like gold only it’s virtual,” Powell said. “People are not using it as a form of payment, or as a store of value. It’s highly volatile. It’s not a competitor for the dollar, it’s really a competitor for gold.”
The comments come as Donald Trump’s incoming administration is expected to take steps to legitimize digital assets. On the campaign trail, Trump positioned himself as the “crypto candidate,” accepting campaign donations in a range of cryptocurrencies, including Bitcoin, Ether, Dogecoin, and Solana .
At the Bitcoin conference in July, then-candidate Trump vowed to set up a national Bitcoin reserve , reaffirming his stance that the U.S. must emerge as a crypto capital and superpower in the world or face competition from other economic powers, like China.
After his election win last month, Bitcoin surged to record high after record high, surpassing the $98,000 before moderating. The leading cryptocurrency traded at around $96,800 as of Wednesday afternoon, with some crypto observers still hopeful that it could cross the $100,000 milestone before year’s end.
With a market capitalization of $1.92 trillion, Bitcoin surpassed silver as the eighth most valuable asset in the world with a market value of $1.75 trillion. It’s still far and away from gold, which is valued at nearly $18 trillion.
When asked whether Powell would own crypto, the Fed chair said simply: “Not allowed to.”
Powell did not address whether the Federal Open Market Committee, the Fed’s decision-making arm, would carry out a third consecutive interest rate cut following its Dec. 17 and 18 meeting. He noted, however, that inflation is slightly hotter than the central bank expected.
“Growth is definitely stronger than we thought, and inflation is coming a little higher,” Powell said. “The good news is that we can afford to be a little more cautious as we try to find neutral.”
The Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, rose 2.3% year-over-year and 0.2% on a monthly basis in October. Core PCE, excluding food and energy, rose 2.8%. While inflation has largely continued to move towards the Fed’s 2% target, other central bank officials have expressed concern over the timing of their goals.
Fed Governor Christopher Waller said Monday that while he is “leaning toward” a December rate cut, he is worried that progress on inflation may be “stalling.”
“Overall, I feel like an MMA fighter who keeps getting inflation in a choke hold, waiting for it to tap out yet it keeps slipping out of my grasp at the last minute,” he said in prepared remarks at the American Institute for Economic Research Monetary Conference.
