Powell the role of encrypted

After its meeting on January 28 to 29, the Federal Reserve kept the interest rates unchanged, saying that he is waiting for greater progress in inflation before looking at any other discounts. However, what the markets caught up with the surprise that was fed in the Jerome Powell chair, unexpectedly positive on encryption – his most absorbing position on digital assets so far.

Editor’s note: This article was written before the United States government reached a preliminary agreement with the Mexico government, at least a comment on implementation tariff For one month. You can read about this development here.

Although Powell did not support Crypto directly, his recognition of its role in the financial system represents a major transformation from the previous suspicion.

As we noticed at the beginning, Powell’s transformation reflects a wider direction – not just organizational acceptance but also a basic change in how traditional financial institutions realize digital assets.

This meeting was also the first since President Donald Trump returned to office, after he clearly mentioned his desire to drop interest rates. while feeding She worked historically independently of the White House, and Trump has publicly challenged his authority:

“I think I know interest rates are much better than they are, and I think I know it is definitely better than the person responsible in the first place for decision -making.”

Despite these capabilities of the conflict, Powell was deliberately maintaining the independence of the Federal Reserve, and refused to engage in Trump’s interest rate. When asked in November if he would resign if Trump asked, Powell Respond With “No”, adding that the reduction in the sponsorship of officials in the Federal Reserve from their governments is not permitted under the law.

The Federal Reserve opens the doors to banking services for encryption

Powell notes on encryption were especially noticeable, as he stated directly that American banks are allowed to serve encryption customers, provided that they properly manage the risks:

“Our role in Bitcoin is to look at, with encryption, is really looking at banks. We believe that banks are fully able to serve encryption customers as long as they understand and can manage risks, which are safe and sound. A large number of banks we organize and supervise do so. “

He also explained that although the regulatory threshold of banks participating in the encryption is still high, the Federal Reserve does not oppose innovation:

“If you choose to conduct this activity within the bank located within the federal safety network, while securing deposits, you want to be completely sure that it is a safe and sound activity. Therefore, we are not against innovation, and certainly do not want to take measures that will make banks end Completely legal customers just because the excessive risk may be associated with organization and supervision.

This prompted the rise in the BTC price to $ 105,000 before the settlement, driven by new confidence in Bitcoin as a financial superpower. It also contradicts sharply with Powell’s former caution towards encryption. Recently in March 2023, Powell described the encryption space as one full of “a lot of disorders”, fraud, and “a lot of things like that”.

However, Bitcoin (BTCIt witnessed a noticeable decrease in the wake of President Trump’s announcement of a 25 % tariff for Canada and Mexico – which highlights its similarity to traditional assets, as it interacts with the total economic shocks in the same way. As an emerging Macro origin, he suffers naturally from volatility during periods of economic uncertainty.

What also appears is that Bitcoin’s imagined risk level may significantly reduce the eyes of the organizers, as they increasingly see it as one of the assets that can integrate safely into the current financial framework.

Bitcoin is placed as Macro’s hedge

Although previous sessions are controlled by retail speculation, the current session is witnessing standard institutional flows – $ 16.6 billion in investment funds circulating in Bitcoin alone in the fourth quarter 2024, which makes the total assets under management (AUM) beyond $ 105 billion, according to To Coinbase X Glassnode Analysis. This level of institutional adoption is amazing, taking into account that the investment funds circulating in gold took nearly five years to reach a similar AUM teacher.

Moreover, the open interest in bitcoin derivatives increased by 60 % in the fourth quarter to nearly $ 100 billion. Immediate trading and derivatives exceeded $ 3 trillion per month in the last two months of 2024 – the first time that this threshold has been crossed.

A large part of the demand for bitcoin stems from investors who turn against excessive government debt and the risk of currency Fiat. According to the latest office of Congress Budget (CBO) Expectations:

• The federal budget deficit is scheduled to reach $ 1.9 trillion in 2025, when it grows to $ 2.7 trillion by 2035.
• The federal debt that the public maintains will increase from 100 % of GDP in 2025 to 118 % by 2035, exceeding its peak after World War II by 106 % in 1946.

In addition, the expectations of the Central Bank of Oman indicate gradual discounts in the rate of federal funds until 2026, as well as a decrease in the rate in treasury notes for a period of 10 years until the end of 2026. Historically, bitcoin flourishes during periods of cash dilution-as shown in 2020- 2021, when the unprecedented FED stimulation was nurtured to increase 500 % at the bitcoin price.

With the expectation of a long -term treasury yield and the Federal Reserve’s reference to a price -cut approach, the value -dependent value -based proposal in Bitcoin has become stronger as investors investing alternatives to dollar -based assets.

Final meals

With the federal budget deficit expected to reach $ 1.9 trillion this year, the public debt is expected to exceed 118 % of GDP by 2035, and concerns about long -term stability of Fiat currencies continue to grow. Meanwhile, the Federal Reserve indicates its acceptance of encryption and preparation to reduce interest rates until 2026 – a group that is scheduled to raise liquidity and investment in alternative assets.

On this background, Bitcoin only gives up speculative past, and moves to hedging the legal macroeconomic economy.