CRYPTO MOVERS AND PRICES
Crypto was, for the most part, rallying this morning after BTC traded as low as USD 53,700 overnight. In the Top 10, THETA continues to outperform.
Crypto Story of the Day
Fed Chairman Jerome Powell’s remarks on BTC during Monday’s Bank for International Settlements’ Innovation Summit garnered attention for his comparison of the asset to gold. However, Powell has previously made similar remarks, signaling that the Chairman’s views on BTC remain unaltered despite the asset’s growth.
Powell was asked if efforts regarding Central Bank Digital Currencies (CBDCs) are “essentially trying to beat them at their own game”— referring to crypto— and “to what degree [does he] see things like [BTC] and Libra represent financial stability threats that [the Central Banks is] trying to get ahead of?”
Powell responded that the Fed’s efforts regarding a CBDC haven’t been solely based on the development of cryptocurrencies, but rather the availability of technology— namely blockchain— to offer a “new form of trusted money.”
Turning to crypto, Powell said “they’re highly volatile— see [BTC]— and therefore not really useful as a store of value and they’re not backed by anything, they’re more of an asset for speculation. So, they’re also not particularly in use as a means of payment. It’s more of a speculative asset that’s essentially a substitute for gold rather than the dollar.”
Powell also remarked that cryptocurrencies also have “outsized energy requirements.” Google search data suggests Powell’s BTC-gold comparison has garnered significant attention, however, Powell has previously repeated an almost identical view on BTC and gold. For example, during the 2019 hearing on Facebook’s crypto project Libra, the Chairman said “Almost no one uses [BTC] for payments, they use it more as an alternative to gold...It’s a speculative store of value.”
During the summer of 2019 when regulatory concerns surrounding Libra came to a head with several Congressional hearings, Powell said “If there were problems there associated with money laundering, terrorist financing, any of the things that we're all focused on, including the company, they would arise to systemically important levels just because of the mere size of the Facebook network.”
At the time, Powell also revealed that the Fed had met with Facebook representatives and set up a “working group” to address unanswered questions regarding the project.
Powell has consistently maintained the line of dismissing BTC while embracing the potential of blockchain, and Monday’s remarks are a continuation of those previously-held views.
Considering the harshness with which the Chairman previously characterized Libra as a potential systemic risk, it’s notable that he tends to use softer language when referring to BTC. For instance, Powell’s dismissiveness towards BTC is in sharp contrast to descriptions of the "serious concerns" surrounding Libra. This continued stance towards BTC comes as the coin’s market cap has surpassed USD 1 trillion, compared to USD 220 million on the day of Powell’s testimony on Libra in 2019.