Jerome Powell acknowledges Bitcoin as ‘Digital Gold’ – ‘Baby steps…’

• Powell acknowledges Bitcoin as a store of value but rejects it as a dollar competitor.
• Rising inflation and the Fed’s stance on QE put pressure on Bitcoin’s next rally.

U.S. Federal Reserve Chair Jerome Powell’s shifting stance on Bitcoin [BTC] has sparked renewed optimism in the crypto market.

Moreover, Binance [BNB] founder Changpeng Zhao (CZ) recently highlighted Powell’s evolving perspective, marking a shift from his previously cautious approach toward the BTC.

CZ praises Powell’s shift in stance

Speaking with Andrew Ross Sorkin at the New York Times DealBook Summit, Powell said, 

“People use Bitcoin as a speculative asset, right?  It’s like gold. It’s just like gold only. It’s virtual. It’s digital. 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.”

Seeing this shift in stance, Zhao said, 

“That’s an improvement to the previous narrative. Baby steps…”

However, despite Powell’s acknowledgment of Bitcoin’s store-of-value potential, he maintains that BTC cannot rival the U.S. dollar due to its high volatility and limited adoption as a payment method.

Current macroeconomic condition

Meanwhile, the broader macroeconomic landscape has added further pressure to risk assets, including crypto.

The latest U.S. Consumer Price Index (CPI) report showed inflation rising to 3% in January, while the Producer Price Index (PPI) surged to 3.5%, marking its highest level since February 2023.

With inflationary pressures mounting and the Federal Reserve holding off on rate cuts, the anticipated crypto bull cycle has seemingly hit a roadblock.

However, as the week drew to a close, crypto prices showed signs of resilience, fueling speculation about potential market rebounds.

What does it hint for Bitcoin?

In fact, Powell’s firm stance against renewed Quantitative Easing (QE) and continued commitment to Quantitative Tightening (QT) has intensified discussions within the crypto community.

His testimony on the 11th of February reinforced that the Fed would only consider QE under extreme conditions, such as near-zero interest rates, making any policy shift unlikely in the near term.

While some view this as a prudent approach to maintaining economic stability, others fear it could prolong the uncertainty surrounding Bitcoin’s next major rally.

With inflation still above target and rate cuts off the table, the crypto market faces a challenging path ahead.

However, Powell’s evolving view on Bitcoin as a store of value continues to spark optimism, leaving investors to speculate on how future monetary decisions might shape the digital asset landscape.