2024-12-19 13:43:21
There’s a reason Fed chair Jerome Powell hates Bitcoin. And it’s a pretty good one
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Jerome Powell is a remarkable man. Whether you like him or not doesn’t change that. A quick look at his resume tells you this is a guy with a level of intelligence only few have ever attained. Now as head of the Federal Reserve, he oversees the world’s most powerful central bank, a machine designed to keep the financial system in line. Then here comes Bitcoin, the decentralized, no-rules wild card of global finance. It’s absolutely no surprise that Powell is skeptical. But the reasons for his hate go deeper than surface-level complaints about volatility or hype. The Fed boss sees Bitcoin as a threat, not just to stability but to the entire financial order he’s tasked with maintaining. During his infamous press conference yesterday, Powell doubled down on where he stands. “We’re not allowed to own Bitcoin. The Federal Reserve Act says what we can own, and we’re not looking for a law change.” But it’s not even what he said. It’s how he said it. The comment was in response to a question that has to do with President Donald Trump’s proposed Bitcoin strategic reserve, and Powell almost looked insulted at it before he opened his mouth. As expected. Predicting his rate cut patterns might be hard, but it’s pretty easy to see that Mr. Powell will never like Bitcoin, even if he secretly respects it. And guess what? That’s completely fine. We’re not here to change his mind. Bitcoin’s bad image: Incels, degens, and chaos traders Bitcoin’s reputation doesn’t help its case either. While Wall Street giants and institutional investors Powell respect have started to embrace it, the crypto is still deeply tied to its roots in online subcultures. Terms like “incels” and “degens” get thrown around in Bitcoin communities, referring to high-risk traders who often treat the market like a casino than a strategic investment space. These are people hyping coins with memes, driving up prices with no basis in fundamentals, and cashing out before the crash. This speculative madness fuels Bitcoin’s extreme price swings. For someone known to be a calculated overthinker, Powell doesn’t have to look far to see the chaos here. Literally, just after his comments yesterday, the top crypto shed 5% of its value in mere hours, dragged down in part by the US stock market. Right there, that’s the problem. The toxic reputation extends beyond trading behavior. Online Bitcoin communities often come across as hostile and shockingly sexually inappropriate, alienating women and high-level thinkers like Powell. And if we’re being honest, Trump being pro-Bitcoin could also be seen as a red flag. Trump, Bitcoin, and the war over a strategic reserve Republican Senator Cynthia Lummis has proposed creating a Strategic Bitcoin Reserve, an idea as bold as it is controversial, if not a bit ludicrous. Under the plan, the Treasury would purchase 200,000 Bitcoins annually, building a reserve of one million tokens. The funding would come from Federal Reserve deposits and gold holdings. So Trump would literally need a go-ahead from Powell to launch this thing. Analysts at Barclays believe the plan would face “stiff resistance” from the Fed. And as we’ve reported before, Powell has rare bipartisan support so strong that he’d easily defeat Trump in a face-off. He kind of already is. The way we see it, this guy is the most powerful person in the world. A single action of his will affect every single life in the world right now. Now to Powell, the idea of a Bitcoin reserve funded by the Treasury is an affront to the very principles of central banking. Why would he risk the global economy and his legacy just to appease the Oval? Powell doesn’t even need to argue against the bill, the numbers speak for themselves. A single comment from him can shave hundreds of billions off Bitcoin’s market cap overnight. Imagine what would happen if the Fed actually tried to hold it. Keep in mind that America is the largest economy on earth. If it goes down, everyone’s gonna go down. Powell’s resistance isn’t just about practicality. It’s also philosophical. The Federal Reserve exists to stabilize the economy, not to gamble on assets that spike and crash with tweets or Reddit posts. Powell’s approach is rooted in decades of financial experience too. Before leading the Fed, he worked at The Carlyle Group, a private equity powerhouse. He’s seen firsthand the dangers of unregulated markets, and Bitcoin checks all the wrong boxes. Powell’s long history of skepticism Powell’s career is a case study in risk aversion. As Under Secretary of the Treasury for Domestic Finance, he dealt with the intricacies of financial regulation and policy-making. His role during the 2008 financial crisis shaped his perspective on stability and oversight. His leadership during the COVID-19 pandemic required aggressive monetary interventions to stabilize markets. Bitcoin’s role as a hedge against fiat currency collapses may hold to an extent, but to Mr. Fed, it’s just a nuisance — a volatile asset that could disrupt the delicate balance he works to maintain. However, it’s not unknown that Powell tends not to like being told what to do, especially when it’s coming from the man who publicly harassed and criticized him time and time again. He just might be itching for a fight. Yesterday, he said he doesn’t see them cutting rates for the most part of next year, which means they’ll be high. Trump hates that. He’ll talk. He’ll verbally attack Powell a lot. And that’ll only make him hate Bitcoin and everything else the president supports even more. Sure, Trump could sit down and have a chat with Powell, maybe even win him over. But he’s Trump, so it’s safe to assume that he likely won’t be doing that. When it comes to the 2025 Fed, Mr. President is the wrong hype man for Bitcoin. Unfortunately for us all.