Yesterday, bulls charged the crypto market, which caused Bitcoin to add $9B t[1]o its market capitalization in less than thirty minutes. But the Fed chairman on crypto is swinging the opposite way.
Today, we’ve seen a few bears emerge from the forest. Specifically, the head of the Federal Reserve spoke on cryptocurrencies today, providing comments that indicate he is bearish on virtual currencies.
Fed Chairman on Crypto: A Risky Investment
On Wednesday, Jerome Powell, the head of the Federal Reserve, which is the US’s central banking system, spoke with members of Congress. During the talks, Powell told Congress that cryptocurrencies present grave risks to investors.
When talking about bull runs, a conversation likely stirred by what happened on Tuesday, Powell said that “unsophisticated investors” will charge the market when the digital asset goes up in price, assuming “this is great; I’ll buy this.” However, according to Powell, “there is no promise of that.”
Despite the popularity of the crypto industry, which earned mainstream interest in 2017, Jerome Powell believes that cryptocurrencies are not real currencies—and he’s not afraid for members of Congress to know this.
Because cryptocurrencies lack intrinsic value, Powell explained, they are not real currencies.
Here’s where Jerome Powell may lose some people:
While it’s true that there are a lot of naive investors in the sector, primarily due to the industry being a ‘learn as you go’ sort of deal (the CFA is trying to change this by adding crypto on the CFA exam[2]), Powell claims that cryptocurrencies have no intrinsic value, which is true. But, and there is a but, this isn’t as bad as it may seem.
Why? Well, because nothing has intrinsic
