Bitcoin fell below $100,000, losing over 5 percent of its value, after Federal Reserve Chair Jerome Powell confirmed that the central bank cannot hold Bitcoin, leaving the decision to Congress.
“We’re not allowed to own Bitcoin,” Powell said at a press conference following the Fed’s two-day policy meeting, during which policymakers cut rates by a quarter point as expected while signaling fewer rate cuts in 2025.
Speaking of the legal issues surrounding holding Bitcoin, Powell said “that’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed”
Bitcoin falls 0.10 percent this week
Powell’s remarks come after President-elect Donald Trump suggested that he plans to create a Bitcoin strategic reserve which propelled crypto market hopes and supported Bitcoin’s rise to a record high.
As of 7:13 GMT, Bitcoin rose 0.96 percent to $101,115 after falling to $98,793 earlier in the session. In the last week, the world’s largest cryptocurrency lost 0.10 percent of its value.
The crypto market has re-emerged in the spotlight this year following Donald Trump’s election as president. Investors are betting that the incoming Trump administration will ensure a friendlier regulatory environment, boosting market sentiment. Bitcoin has gained 192 percent so far this year.
Since the November 5 election, Bitcoin has surged more than 50 percent. The total value of the cryptocurrency market has almost doubled in the last year, hitting a record over $3.8 trillion, according to CoinGecko.
Read: Gold reserves at CBUAE surpass $6.3 billion in Q3 2024
Strategic reserve prospects
Trump suggested that he would create a U.S. Bitcoin strategic reserve without providing additional details on what the reserve would include. However, he noted that initial holdings could include bitcoin seized from criminals. According to data provider CoinGecko, governments around the world held 2.2 percent of Bitcoin’s total supply in July, with the United States possessing nearly 200,000 Bitcoins worth over $20 billion.
In July, Republican Senator Cynthia Lummis introduced a bill that would create a Bitcoin reserve operated by the Treasury. The bill notes that the Treasury would create a program to buy 200,000 bitcoins annually for five years until the stockpile reaches one million tokens. This represents about 5 percent of the total global supply of Bitcoin of around 21 million.
The Treasury would fund the purchases with profits on Federal Reserve banks’ deposits and gold holdings. The reserve would then be maintained for a minimum of 20 years. Funding this reserve, however, will likely need to be considered by Congress, as Powell noted.
Powell’s skeptical comments regarding a Bitcoin strategic reserve reflect the Fed’s stance on holding digital assets. Earlier this year, Powell said policymakers were “nowhere near” accepting the implementation of a central bank digital currency.
Following Powell’s latest comments, the overall cryptocurrency market also fell. Ethereum dipped by 6.8 percent, Binance Coin dropped by 4.6 percent, and Dogecoin lost 11 percent.
