The US Federal Reserve (Fed), recognized as one of the world’s most influential financial institutions, is going through a notable leadership transition. The new Fed leadership’s stance on cryptocurrencies, and especially on Bitcoin, is under close scrutiny by markets.
Fed board sees Bitcoin as “digital gold”
Several members of the Fed’s board have signaled a favorable view of Bitcoin in their previous statements. Among them, Kevin Warsh, who still serves as a board chair, regards Bitcoin as a form of “new gold” for younger generations. Warsh is particularly known for highlighting Bitcoin’s role as a safe haven, especially for investors under the age of 40.
Board member Christopher Waller also describes Bitcoin as “electronic gold,” emphasizing the cryptocurrency’s function as a store of value. According to Waller, Bitcoin offers a digital alternative to traditional precious metals and broadens the landscape of value preservation tools for investors.
Jerome Powell, who served as Fed chair in recent years, has at times made positive references to Bitcoin as well. During the New York Times DealBook Summit, Powell recognized Bitcoin’s speculative nature but nonetheless compared the leading cryptocurrency to gold, describing it as “virtual, digital, and used mostly as a speculative asset, like gold.”
Powell acknowledged that Bitcoin is widely used for speculation and accepted as a digital asset similar to gold, offering an assessment that moved beyond traditional viewpoints.
However, some board members are more reserved. Michelle Bowman, Philip Jefferson, and Lisa Cook have been cautious about cryptocurrencies, though they do not reject blockchain technology altogether.
Michael Barr, who leads the Fed’s financial regulatory efforts, stands out as the most notable skeptic in the group. Last year, Barr publicly warned about the risks linked to stablecoins, highlighting potential vulnerabilities within the financial system.
Macro conditions take center stage for crypto
Overall, the current Fed leadership exhibits its most positive approach yet toward Bitcoin, with “digital gold” comparisons frequently appearing in official commentary. This has led to hopes that the new era could be more crypto-friendly. Nevertheless, global economic dynamics remain a key factor influencing the direction of cryptocurrency markets.
Recent inflation data has come in higher than anticipated, weakening the likelihood of rate cuts in the near future. According to prevailing market expectations, investors now see a 60 percent chance that the Federal Open Market Committee (FOMC) will raise the policy rate by another 25 basis points at its January meeting. Such a move could cast a negative shadow over crypto markets.
Bitcoin, in particular, is highly sensitive to shifts in global liquidity conditions. Renewed expectations of interest rate hikes may put additional downward pressure on Bitcoin and broader cryptocurrencies alike.
