Bitcoin prices fell over 5% after Federal Reserve Chairman Jerome Powell stated the central bank cannot own the cryptocurrency, reinforcing regulatory restrictions. Meanwhile, sentiment had been buoyed by President-elect Donald Trump’s supportive stance on cryptocurrency, which has seen Bitcoin rise significantly earlier in the year, hitting record highs.

Bitcoin experienced a significant decline on Wednesday following remarks from Federal Reserve Chairman Jerome Powell, who stated that the central bank is not permitted to hold the cryptocurrency. Powell emphasized that the Federal Reserve Act restricts ownership of bitcoin and clarified that any potential changes to these regulations would need to be addressed by Congress, not the Federal Reserve. The digital currency’s value subsequently dropped over 5% in the afternoon, after having recently reached record highs.

Despite previous gains, where Bitcoin’s price soared above $101,000—a 125% increase from the start of the year—investor confidence has been shaken. This rally had been partly buoyed by positive sentiments surrounding President-elect Donald Trump’s intention to establish the United States as a leader in the cryptocurrency space. Trump’s administration signaled an inclination toward a favorable regulatory environment, with initiatives that include appointing allies in key financial roles, thereby fostering optimism in the market.

In response to a question about Bitcoin’s potential as a reserve asset for the United States, Powell asserted unequivocally, “We’re not allowed to own bitcoin. The Federal Reserve Act says what we can own, and we’re not looking for a law change.” Notably, President-elect Trump had previously expressed ambitions to make the nation a global crypto powerhouse. Until recent days, Bitcoin had been trending positively, hitting a landmark price just above $108,000 earlier in the week.

The interplay between regulatory decisions and the volatile nature of bitcoin continues to shape its market trajectory. Investors remain cautious as speculations mount regarding the influence of political moves and institutional stances on the future of cryptocurrencies.

The discussion surrounding Bitcoin and its role within national reserves has gained traction as cryptocurrencies become increasingly mainstream. As regulatory frameworks evolve, central banks are reevaluating their positions on digital currencies. Jerome Powell’s definitive stance against the Federal Reserve possessing bitcoin underscores the complexity of aligning traditional financial systems with emerging technologies. Moreover, President-elect Donald Trump’s advocacy for a pro-cryptocurrency regulatory environment illustrates the potential for significant policy shifts that could impact market dynamics.

The recent comments from Chairman Jerome Powell have instigated a notable decrease in Bitcoin’s value, reflecting the intricate relationship between federal regulations and cryptocurrency markets. As the Federal Reserve maintains its current stance against holding bitcoin, the implications of political influences, particularly from figures like President-elect Donald Trump, may play a substantial role in determining the future trajectory of cryptocurrency within the broader economic framework.

Original Source: www.usatoday.com

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