Bitcoin's Volatility: A Barrier to Currency Status

Federal Reserve Chair Jerome Powell recently criticized Bitcoin, stating that its high volatility makes it unsuitable as a currency. Powell described Bitcoin as a 'virtual gold' rather than a competitor to the dollar during an interview at the New York Times DealBook Summit. He emphasized that people are not using Bitcoin as a form of payment or as a store of value, highlighting its instability.

Powell also reiterated the central bank's commitment to safeguarding the banking system against the risks posed by cryptocurrencies. He stated, "We regulate and supervise banks, and we want the interaction between the crypto business and banks to not threaten their safety." Additionally, Powell stressed the importance of consumer protection, ensuring that buyers fully understand the risks associated with cryptocurrencies.

These remarks come as Bitcoin approaches the historical benchmark of $100,000, with trading 0.69% higher on the day at $96,588. Ethereum also saw a 6% increase, trading at $3,836 as of 2:25 pm ET.