Federal Reserve Chair Jerome Powell has voiced his opinions related to the cryptocurrency market. Powell speaking at a virtual panel discussion on digital banking, admitted that cryptocurrency was not the U.S Government’s focus. 

Powell stated that while cryptocurrencies did not compete against the dollar, they were a substitute for gold. He said, “It’s more a speculative asset that’s essentially a substitute for gold rather than for the dollar.”

Bull Market Sees Crypto Adoption Grow 

The recent surge in the cryptocurrency market is driving mainstream adoption in 2021. Governments and large corporations have begun to take notice as Bitcoin has soared to $60,000. Up from a dramatic sell-off one year ago that saw the price at $3,500.

The growth has led many to believe that the market is in a bubble. Powell used the market’s volatility as a relevant factor for not being considered a store of value, saying, “They’re highly volatile and therefore not really useful stores of value, and they’re not backed by anything.” 

While the US Government mulls over the use of cryptocurrency, countries across the globe are testing out Central Bank Digital Currencies (CBDC). Powell, however, believes that if the U.S were to implement a digital asset, it would require care and transparency, along with approval by Congress. 

In the meantime, countries such as China, Japan, and Korea have begun testing their own CBDCs. With China leading the race with the development and adoption of their own CBDC platform, which looks to be moving out of beta testing. 

Crypto Versus Gold 

Powell may not have much interest in volatile cryptocurrency, and he mentioned that he sees the market as more aimed at replacing gold than the US Dollar. This could be considered a compliment when considering bitcoin versus Gold’s performance over the last year alone.

Gold continues to remain relatively stable, while bitcoin has seen phenomenal growth over the last year. Pushing retail investors to consider adding Bitcoin to their investment profiles. 

Larger corporations such as Square, Tesla, and MicroStrategy have been actively acquiring Bitcoin this year. The investment shift has brought the companies massive gains in value following bitcoin’s surge upwards. However, the move represents a loss of confidence in the US dollar. 

The Federal Reserve Chair is clearly not inclined to cryptocurrency. His opinion may be tested in 2021 as market adoption continues to explode.