The U.S. Federal Reserve, the most influential central bank in the world, is currently in the middle of a leadership transition that could be a boon for Bitcoin as well as other major cryptocurrencies.
In fact, the new board of governors is already viewed as the most pro-BTC lineup based on the statements made by the officials in the past.
The “digital cold” camp
Kevin Warsh, the chair of the Federal Reserve, is a vocal Bitcoin supporter who views the flagship coin as a safe haven. He actually views BTC as the new gold for those who are under 40.
Christopher Waller has also made pro-BTC statements. He has dubbed the asset “electronic gold,” arguing that its primary market function is to serve as a digital alternative to the precious metal.
Jerome Powell, the current chair of the Federal Reserve, has also made surprisingly bullish pro-Bitcoin comments in the past despite being mainly viewed as a cautious traditionalist. At the New York Times DealBook Summit, Powell clarified that he views Bitcoin as a speculative asset, but he also compared it to gold. “People use Bitcoin as a speculative asset – it’s like gold, only it’s virtual, it’s digital,” Powell stated.
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There are also some pragmatists, including Michelle Bowman, Philip Jefferson, and Lisa Cook. They are cautious about crypto, but they are not rejecting it.
Michael Barr is the only skeptic. Last year, he specifically warned about the risks posed by stablecoins.
A potential rake hike
There is an unprecedented level of bullishness and “digital gold” sentiment among the Federal Reserve’s leadership, but macroeconomic realities may still hurt crypto.
A run of hotter-than-expected inflation data has severely weakened the case for near-term rate cuts. In fact, investors now see a 60% chance that the Fed’s benchmark interest rate will be 25 basis points higher by January’s FOMC meeting.
Bitcoin is highly sensitive to global liquidity, and the Fed switching back to the interest-rate hiking mode would be incredibly bearish.
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