The cryptocurrency market is witnessing tumultuous fluctuations, with inflation data recently proving disheartening. Cryptocurrencies continue to react excessively to negative news while disregarding favorable developments. However, significant statements from Powell have just emerged, providing potential support for these digital assets.
U.S. Banks and Cryptocurrency
We all remember the collapse of FTX in 2022 vividly. During that time, banks were advised to steer clear of cryptocurrencies, and there were increasing calls for caution. While Yellen discussed the risks associated with cryptocurrency for banks, the CP2.0 operation was already isolating crypto companies from traditional banking.
Today, the tide seems to be turning. Instead of being an adversary, the environment is now more conducive for cryptocurrencies. Despite concerns regarding inflation and interest rates dragging markets down, Powell has made remarks suggesting that banks may venture into the cryptocurrency space under Trump’s administration.
“We do not want to hinder banks from serving entirely legal customers who are active in the cryptocurrency space,” Powell stated. “When banks begin their own cryptocurrency operations, we must ensure that we understand the risks involved. Many activities in the cryptocurrency market can be conducted effectively within banks.”
Despite these remarks, BTC prices remain stagnant around the $95,000 mark. Discussions about the likelihood of interest rate increases, the potential for rates to remain close to current levels until the end of 2026, and the latest inflation data have created a constricting atmosphere for cryptocurrencies.
