As a seasoned crypto investor with over a decade of experience navigating the volatile digital asset landscape, I can confidently say that Jerome Powell’s comparison of Bitcoin to gold is a significant milestone for our industry. While it might not have been the validation we were hoping for as an alternative currency, it certainly cements Bitcoin’s position as ‘digital gold.’
On Wednesday, the value of Bitcoin climbed above $99,000, fueled by comments from Federal Reserve Chair Jerome Powell that drew comparisons between Bitcoin and gold.
At the New York Times DealBook Summit in Manhattan, Jerome Powell referred to Bitcoin as a substantial financial asset akin to gold, emphasizing that it deviates from the concept of a practical, transactional currency.
Bitcoin is a Competitor for Gold
Although some supporters of cryptocurrencies see Bitcoin as a possible substitute for the U.S. dollar, Powell has expressed that he doesn’t hold this view. When questioned about his personal involvement in crypto investments, Powell stated that it is prohibited for him to do so.
It’s widely believed that Bitcoin functions as a digital equivalent to gold because of its consistent year-on-year growth and dominance over traditional assets. Interestingly, some Bitcoin Exchange Traded Funds (ETFs) in the U.S. market have surpassed their gold counterparts in growth within just a few months of being launched.
As a researcher, I’d put it this way: “I liken it to physical gold, but in a digital form. Unlike traditional uses of money or value storage, it exhibits extreme volatility. It isn’t challenging the U.S. dollar as a currency, rather, it’s vying for the role that gold has held in portfolios.
Power’s statement follows indications from the incoming Trump administration suggesting possible actions to bolster digital currencies. Throughout his campaign, Trump displayed a favorable stance towards cryptocurrencies. He even received contributions in various digital tokens such as Bitcoin, positioning himself as a proponent of cryptocurrency.
Bitcoin is increasingly seen as a modern equivalent of gold, not just by cryptocurrency enthusiasts but also by conventional finance and authorities. In other words, Bitcoin’s success story is becoming more apparent.” – Dan Held, in his recent post on X (previously known as Twitter).
In July, he made a commitment to create a country-wide Bitcoin reserve. Similar sentiments have been expressed by Trump’s fellow Republicans, who have suggested setting up Bitcoin reserves at various state levels.
Currently, Trump has put forward Paul Atkins, an advocate for cryptocurrency, as his nominee for the position of Securities and Exchange Commission (SEC) head. Previously, Atkins served as a commissioner at the SEC during the Bush administration, representing the Republican party.
There’s a positive buzz that his leadership could bring a change towards less strict cryptocurrency regulations in the industry, contrasting with the outgoing SEC Chair Gary Gensler, who is set to leave office on January 20th.
The price of Bitcoin, which dropped to less than $94,700 during the day’s trading on Wednesday, surged significantly after these updates. This digital currency has seen a staggering 135% increase in value this year, reaching an all-time high of $99,768 in early November.
In essence, Jerome Powell’s comments about Bitcoin signal a growing understanding among financial institutions and governments worldwide that digital assets have significant potential to revolutionize and modernize our national economies.
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2024-12-05 02:08