Despite Powell’s comments about Bitcoin and the cautious stance from whales, the crypto was still able to climb over $100,000 for the first time in history. Meanwhile, New York City Mayor Eric Adams is still bullish, and even bragged about Bitcoin’s growth since accepting his first three paychecks in BTC. Controversy also surrounds the U.S. government’s recent $1.9 billion Bitcoin transfer to Coinbase, and critics like Jason Lowery called the move a huge strategic mistake.
Powell Dismisses Bitcoin’s Impact on Dollar Dominance
Federal Reserve Chair Jerome Powell recently reiterated that Bitcoin (BTC) is more comparable to gold than it is a competitor to the U.S. dollar. At The New York Times-hosted DealBook Summit in New York on Dec. 4, Powell described Bitcoin as a speculative asset, similar to virtual gold.
He brushed off the notion that Bitcoin is widely used as a form of payment or a reliable store of value, and specifically pointed out its high volatility. ”It’s not a competitor for the dollar. It’s really a competitor for gold,” Powell stated.
Jerome Powell at the DealBook Summit (Source: New York Times)
Powell also addressed the idea that Bitcoin reflects a loss of faith in the Federal Reserve and the U.S. dollar, and rejected the claim. When asked whether he owns Bitcoin, Powell clarified that he is prohibited from holding it. While he is not opposed to crypto companies conducting business with banks, he did mention that it is still important to safeguard the financial system’s stability and consumer protection.
Bitcoin’s recent price surge to over $99,000 reignited discussions around its role in the financial system. This rally has been partly attributed to Donald Trump’s presidential election victory in November, which is seen as a boost for the pro-crypto movement in the United States. Trump’s cabinet appointments, including hedge fund manager Scott Bessent as Secretary of Treasury and Cantor Fitzgerald CEO Howard Lutnick as Secretary of Commerce, could signal that the U.S. is taking a much more crypto-friendly approach.
Additionally, Trump’s reported favouritism of crypto advocate Paul Atkins taking over as chair of the Securities and Exchange Commission (SEC), after Gary Gensler’s resignation announcement, also proves that things are shifting for crypto in the U.S. While Trump has been quite critical of Powell’s policies, the Federal Reserve Chair made it clear he has no intention of stepping down, regardless of political pressure.
NYC Mayor Eric Adams Defends Bitcoin
New York City Mayor Eric Adams, who is currently facing multiple criminal charges, recently referenced his Bitcoin holdings while mocking members of the press. After an event at the American LGBTQ+ Museum on Dec. 3, Adams responded to a question about Tesla CEO Elon Musk’s potential role in government by mentioning the Bitcoin he received while in office. Encouraging others not to fear Bitcoin, Adams quipped, “Remember y’all laughed at me when I first got my Bitcoin, who’s laughing now?” He recalled the criticism he faced for his decision to accept his first three paychecks in Bitcoin, and stated, “Now you wish you would have done it.”
Adams became New York City’s mayor in January of 2022, and announced his intention to take his first three paychecks in Bitcoin when the cryptocurrency was priced at around $61,000. Since then, Bitcoin’s value rose to approximately $102,000, which is an impressive increase.
His decision came as part of a broader push among elected officials to adopt crypto-based salaries, after Miami Mayor Francis Suarez’s similar pledge. Adams wanted to position New York City as a hub for the cryptocurrency industry. He often promotes crypto-friendly policies and criticises restrictive legislation, like the state’s 2022 two-year moratorium on non-renewable energy-based proof-of-work mining.
However, Adams’ tenure has been marred by legal troubles. In September, he was indicted on charges including conspiracy, wire fraud, bribery, and accepting campaign contributions from foreign nationals. If he is convicted and sentenced consecutively, he could face decades in prison. Despite these challenges, Adams is still advocating for cryptocurrency.
Government’s $1.9B Bitcoin Move Criticized by Experts
The U.S. government’s recent decision to transfer $1.9 billion worth of Bitcoin to Coinbase attracted a lot of criticism from the crypto industry. Jason Lowery, a United States Space Force major and author, labeled the move a “strategic mistake,” and argued that selling Bitcoin fails to recognize the technology’s significance. He also warned that actions like this could lead to future attempts by the government to reclaim the Bitcoin sold. He even compared it to the 1933 Executive Order 6102, which restricted gold ownership.
The transfer was conducted on Dec. 2, and involved 19,800 BTC that was sent to a Coinbase Prime deposit address. Coinbase CEO Brian Armstrong completely agreed with Lowery’s sentiments, and suggested the government should keep its holdings.
Other critics, including crypto educator Toby Cunningham, shared that any sold Bitcoin will very likely be quickly absorbed by the market. Despite speculation about an impending sale, analytics platform Spot On Chain suggested that the transfers might be custody-related rather than sales.
Julio Moreno, the head of research at CryptoQuant, estimated that only 10,000 BTC were likely sold, with the rest moved to a new address. Spot On Chain data indicates the U.S. government still holds approximately 183,850 BTC, which is valued at $17.7 billion across various wallets.
The transfer caused Bitcoin’s price to dip almost 3% to $94,500 before recovering. The lack of official confirmation of a sale also left traders with a lot of questions about the government’s intentions with its huge Bitcoin holdings.
Bitcoin Whales Remain Cautious
While Mayor Eric Adams seems very bullish on Bitcoin, traders are taking a more cautious approach. This is especially due to the fact that BTC still continues to hover close to $100,000. As a result, whales adopted a more cautious stance and crypto analysts are pointing to mixed market signals.
According to CryptoQuant contributor Onat Tütüncüler, a large inflow of Bitcoin to exchanges has been observed since Donald Trump’s presidential election win, which could indicate a potential risk of future sell-offs. However, there is no immediate selling pressure, which suggests that large holders are taking a “wait-and-see” approach.
Adjusted Spent Output Profit Ratio chart (Source: CryptoQuant)
Tütüncüler also pointed out that the Adjusted Spent Output Profit Ratio (aSOPR) does not yet indicate serious profit-taking activity, which aligns with typical bull run behavior where traders hold Bitcoin in anticipation of more growth. Despite this, Bitcoin dominance dropped a lot since Nov. 28, which could hint at a possible rotation into other cryptocurrencies.
BTC’s price action over the past 24 hours (Source: CoinMarketCap)
Bitcoin is currently trading hands at $102,888.78 after hitting a new all time high price of $103,900.47 over the past 24 hours. Long-term holders, who bought their Bitcoin at an average price of $24,994, have seen massive unrealized gains. Nonetheless, skepticism persists among traders with regards to Bitcoin’s ability to stay above $100,000 by the end of 2024.
Pseudonymous trader Rekt Capital noticed Bitcoin’s repeated retesting of support levels, suggesting that it may reclaim the $96,400 support if downside wicks continue to lengthen.
This article was originally Posted on Coinpaper.com
