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The Federal Reserve Chairman’s views caused a stir in the financial world.
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The long-term price expectation is good, but there is uncertainty about the Bitcoin reserve.
After following a path that brought it closer to USD 110,000, the price of bitcoin (BTC) registered a significant drop on December 18. The price of the digital currency decreased to levels around USD 96,000 due to the statements of the president of the Federal Reserve (Fed), Jerome Powell.
The official speak of the possibilities that exist to create a bitcoin reserve, pointing out the limitations posed by the Federal Reserve Law.
It is an idea that caused a stir in the marketshighlighting the importance that the issue has acquired among investors, despite the fact that it has only been in public opinion for a few months and only gained strength after Donald Trump’s election victory.
In this way, the proposal, which seemed isolated at the beginning of this year, has become a key point in traditional investors’ evaluation of the Cryptocurrency market. Hence the effect caused by Powell’s cautious attitude.
The impact of this clear rejection by the Fed on the market was immediate. The value of the cryptocurrency, which had increased considerably since the election of Donald Trump, experienced a huge drop.
And while long-term bitcoin price predictions remain good, it is clear that the fact that doubts over whether or not the BTC reserve will be created marks a moment of uncertainty, which both traditional and institutional investors see as a possible setback.
The price drop has been pronounced after Jerome Powell’s announcement. Source: Marktbericht
The confusion caused by the Fed Chairman’s recent statements will likely not last as cryptocurrency investors gain greater perspective on the situation in the coming months. The outlook probably becomes clearer after Donald Trump’s inaugurationscheduled for January 20 of next year.
trump stands firm in pointing out that it will create a strategic reserve of bitcoin in the United States, although It has not provided details about what it would entail or the mechanism it will use to establish it..
Most assume it will continue the established guidelines in the bill introduced by Senator Cinthya Lummis in July. If so, initial holdings could include bitcoins confiscated from criminalsuntil accumulating around 5% of the total BTC issuance (a total of 1 million BTC in 5 years).
There is also talk that the reservation would be created by Executive Order that the new president would dictate, as soon as he takes office. Although, as CriptoNoticias has reported, it is also expected that Lummis’ proposal advance smoothly in Congress.
However, Powell’s position suggests an institutional struggle. In that sense, an analysis published this week by Barclays, indicates that since the financing of a strategic reserve of bitcoins will require making amendments to the Federal Reserve Act, not only the approval of Congress but the issuance of new Treasury debt will be necessary.
“Given the possible ways in which such a reserve could be created, we suspect that such a plan would face strong resistance from the Federal Reserve,” the firm’s analysts said.
Therefore, while this process advances and the controversy remains current, it is foreseeable that market sensitivity will be maintained. A vulnerability that increases as new and possible regulatory changes are proposed, which may possibly be the norm in 2025 not only in the United States but in other regions of the world. Among them is the European Union, which premieres the second part of the Regulation for the Cryptoasset Market (MiCA).
The most likely thing that will happen then is that the position of the different financial institutions will be like a button that – depending on how it is pressed – will affect the evolution of cryptocurrency prices.
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