In a remarkable admission during his testimony to Congress, Federal Reserve Chair Jerome Powell admitted that bitcoin is used as an alternative to gold, conceding that BTC is a store of value. He said before the Senate:
“Really, almost no one uses bitcoin for payment, they use it more as an alternative to gold really. It’s a store of value; it’s a speculative store of value like gold.”
Bitcoin: “The Virus Is Spreading”
There is clearly huge significance to the world’s most important central bank labeling bitcoin as a store of value after huge corporations have said the opposite. Plenty of people in the cryptocurrency world took to Twitter to celebrate. Morgan Creek Digital’s Anthony Pompliano was the most high profile, writing a triumphant ode to Powell’s nod to BTC.
“It’s a store of value” — Jerome Powell, Chairman of the Federal Reserve talking to the Senate Banking Committee about Bitcoin
THE VIRUS IS SPREADING 🔥
— Pomp 🌪 (@APompliano) July 11, 2019
Peter Schiff Slams Powell’s Bitcoin/Gold Comparison
On the opposite side of things, notable gold bull Peter Schiff had some strong words for Jerome Powell. Criticizing the Fed Chair, he likened the validation of bitcoin by such a prominent individual to the financial crisis of 2008.
Just like Alan Greenspan encouraged homebuyers to take out ARMS at the height of the housing bubble, Jerome Powell effectively just did the same thing with Bitcoin. By claiming it's similar to gold he not only validated Bitcoin, but encouraged people to buy into the bubble.
— Peter Schiff (@PeterSchiff) July 11, 2019
Facebook’s Libra Facing Severe Regulatory Scrutiny
There was more than just talk about bitcoin. Powell also addressed lawmakers’ concerns about the regulatory risks associated with Facebook’s Libra coin. Once again, the Fed Chief appeared to be taking a severe approach to Calibra.
“Libra raises a lot of serious concerns. Those would include around privacy, money laundering, consumer protection, financial stability. Those are going to need to be thoroughly and publicly evaluated before this proceeds.”
The bitcoin price did not join the party in the wake of Jerome Powell’s comments. This may be because it was buried in a long testimony that included his rather harsh approach to Libra, suggesting a similar approach might be applied to BTC. In fact, despite the landmark concession from Powell, BTC/USD is crumbling sharply back toward $11,000.
Win for the Winklevoss Twins
The Winklevoss twins are perhaps the most well-known proponents of the “digital gold” use case. The brothers will no doubt be delighted to hear the Federal Reserve taking a similar view. Proponents of spending cryptocurrency (like John McAfee or Bitcoin Cash developers) will likely view Powell’s comments with less enthusiasm.