Fed Chair Powell rules out Fed ownership of Bitcoin, casting doubt on the future of a national Bitcoin reserve. (Photo by Alex Wong/Getty Images)
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Key Takeaways
The Federal Reserve announced a 25-basis-point rate cut at the final FOMC meeting of 2024.
Fed Chair Jerome Powell stated the central bank is not permitted to hold Bitcoin.
Powell’s comments triggered a sharp crypto market downturn, erasing $800 million in leveraged positions.
The Federal Reserve concluded its final Federal Open Market Committee (FOMC) meeting of 2024 with a widely-anticipated 25-basis-point rate cut, signaling a shift in monetary policy.
However, the real shock came from Fed Chair Jerome Powell, who revealed that the central bank is legally barred from owning Bitcoin.
Powell’s remarks dampened hopes for a strategic Bitcoin reserve—a prospect widely anticipated since President Donald Trump’s election victory—and sparked a sell-off that wiped out over $800 million in leveraged positions.
Historically, Federal Reserve rate cuts have been bullish for crypto markets, as demonstrated during the COVID-19 pandemic.
Optimism was high leading into the FOMC meeting, with many anticipating a rally after weeks of subdued trading. Instead, Powell’s Bitcoin remarks overshadowed the dovish policy shift, igniting a market-wide sell-off.
Bitcoin dropped over 5% in the aftermath, with altcoins suffering double-digit losses.
The crypto market bleeds red. Source: Coinglass
“We’re not allowed to own Bitcoin,” Powell stated during the post-meeting press conference. “The Federal Reserve Bank says what we can own, and we’re not looking for a law change. That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.”
National Bitcoin Reserve: A Waning Dream?
The idea of a national Bitcoin reserve gained traction during the 2024 presidential campaign, with President-elect Donald Trump championing the proposal as part of his pro-crypto platform.
His campaign promises galvanized state-level initiatives, with lawmakers in Ohio, Texas, and Pennsylvania introducing bills to establish state Bitcoin reserves.
However, Powell’s comments have cast doubt on the feasibility of a national Bitcoin reserve.
While the Fed cannot own Bitcoin under current regulations, Powell suggested that any changes would require legislative action—a significant hurdle given the partisan divide in Congress.
Proponents argue that Bitcoin reserves could act as a hedge against the declining value of the U.S. dollar.
Critics, however, highlight Bitcoin’s volatility and the geopolitical leverage provided by the dollar’s dominance in global trade.
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
Beyond his professional pursuits, Prashant is an avid music enthusiast, often exploring diverse genres to unwind. A sports lover, he has a particular passion for cricket and frequently engages in discussions about the game. His multifaceted interests and sharp journalistic instincts make him a valuable contributor to CCN, where he continues shaping the crypto landscape's narrative.
