Anbbit Overview | Jerome Powell: Fear on Loss and Bitcoin “Too Big to Ignore”

Anbbit Overview | Fear on Lost and Bitcoin “Too Big to Ignore”

What are your thoughts on U.S. Federal Reserve Chairman Jerome Powell saying that cryptocurrencies are assets for speculation much like gold rather than a substitute to the U.S. dollar?

Honestly speaking, when I see this question, there will be an impression “Too big to ignore” which always too used to show the position of Bitcoin occurred in my mind. Then I thought about “Fear”.

This “Fear” is totally different from the fear for traders on the investment Market. It is just like the differences between when a trader talks about Bitcoin and when the chairman of the Federal Reserve talks about Bitcoin officially.

We all know about what’s the significance of the Federal Reserve and the influence of the chairman of it.

To talk bout the Federal Reserve, we have to talk about the money. Let’s think about an extreme situation but that will never happen: A world where money is free-flow and no rules on how to spend, borrow or lend it. You may think that would be great but how about it last long term?

In this way, you can realize how important the function of the Federal Reserve is. It conducts the nation’s monetary policy-promotes the stability of the financial system and promotes the safety and soundness of individual financial institutions.

Since the U.S.D as the Global currency has been over 70 years, there is no doubt that its position is never been challenged.

Cryptocurrency on the Federal Reserve’s view

I have searched “cryptocurrency” on www.federalreserve.gov, there will be 49 documents related to cryptocurrency among all the materials.

Among 41 documents, the earliest document related to Bitcoin was filed in 2014. At that time, the researchers only study the advanced conceptions about decentralization and the astonishing technology of blockchain. No clue shows that the price should be paid attention to.

Then in the next several years, cryptocurrency has only become the accessorial topic which is referred on the many important conferences, dialogues, and so on.

While after 4 years, in 2018 April, there will be some special part on An Update on the Federal Reserve’s Financial Stability Agenda to discuss cryptocurrency. However, this part aims to illustrate the threats of cryptocurrency on the financial system.

Then in May 2018, there was an article special for research the Cryptocurrencies, Digital Currencies, and Distributed Ledger Technologies, maybe these mark the Federal reserve to pay attention to the whole cryptocurrency industry. Although Since 2016, the Bank’s Fintech focus targeted business clients that recognized cryptocurrencies as a distinct asset class, including digital currency exchanges and institutional investors such as hedge funds, market makers, and venture capital firms, the Federal Reserve did not take more measures on the industry.

Then it came to 2019, Lael Brainard, a member from the Federal Reserves related the cryptocurrency on the Update on Digital Currencies, Stablecoins, and the Challenges Ahead, and state that cryptocurrency is still a small market with small capitalization. This was the truth that the whole cryptocurrency market was undergoing a horrible time.

In October 2020, the proposed rule would define CVC as a medium of exchange (such as cryptocurrency) that either has an equivalent value as currency, or acts as a substitute for currency, but lacks legal tender status.

In 2021, in the Federal Reserve document, cryptocurrency was still referred to as something that will make negative effects on the payment fields or financial fields.

From the whole timeline of the opinions about cryptocurrency, we can tell that cryptocurrency is never been regarded as a threat by The Federal Reserve whatever on the financial or other aspects. Also, in most of the documents, cryptocurrency is considered to be possibly related the insecurity, laundry of money, and so on, which show the attitude of the Federal Reserve.

The Changed of the Federal Reserve

As the Chairman of the Federal Reserve, Jerome Powell is the representative of the Federal Reserve, so the consistent opinions are significant and should be maintained.

So though the Federal Reserve is so depreciated to cryptocurrency, why the Chairman critiqued Bitcoin officially?

Maybe because bitcoin is “too big to ignore”. It is true that Bitcoin is a small capitalization, but the growth of Bitcoin is breathtaking. For the investment market, the “no selection” situation has become history. More and more significant investment institutions start to enter the game and show a positive attitude and invest in Bitcoin, so the price of the bitcoin rocket to the moon.

Besides, the decentralized technology is affirmed by many people, also the Federal Reserve has researched for this special. Also, the limited number of Bitcoin makes people think it will be more valuable. Comparing with the Dollar, the advantages are obvious. There is no government or institution to issue Bitcoin, so there would not show the inflation. That’s why some people think that Bitcoin may be the substance of the Dollar.

As a method to stimulate the economy, issuing the Dollar becomes a usual way to aviate the economy. However, as a global currency, the issue will make the negative effects on other effects, which makes investors think that the Dollar is not a Safe-haven asset, and bitcoin seems to become the better option.

Future without the Dollar

Let’s imagine that if the Dollar lost the position of global currency, what will happen?

The Federal Reserve will lose the priority to influence the whole world. For the United States, this will become a fatal defeat for whatever the finance or economy. The Federal Reserve will not allow this to happen. or this will mean the dereliction of duty. Jerome Powell is the first one who should be blamed.

So this is why we talk about Fear. Fear is a natural, powerful, and primitive human emotion, however, for a chairman of the Federal Reserve, fear means the responsibility and mission of the position of the Dollar.

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