FED Is Targeting Crypto And The Potential Price Impact On The Crypto Market
Widely-followed crypto strategist Mike Jenkins from Coin Bureau shares with his subscribers FED actions on the cryptocurrencies and potential legislation and regulations on the market.
Why Fed Important?
According to the analyst, the Fed is tasked with shaping monetary policy which impacts the amount of liquidity in the system. It is this monetary policy that affects everything from interest rates to growth, employment and inflation.
“What the Fed does with Monetary policy can effectively determine which direction the economy goes. Hence, knowing what the Fed thinks about crypto can help you determine whether there will be any regulations and other enforcement.”
Fed and Cryptocurrency
In a congressional session in 2018, Fed Chairman Jerome Powell unloaded on cryptocurrency. He claimed that most of those that were buying cryptocurrencies were doing so in an expectation of an increase in price. Moreover, he had consumer concerns with crypto.
“However, he did seem to have a more positive view about blockchain technology more broadly which shows that he was thinking about the tech early on,” the trader says.
However, as 2020 rolled around, there was a paper that was released in August that talked about unprecedented money printing and its correlation with crypto. This was released on the same day that Lael Brainard was giving a speech on crypto risks.
According to the trader, it was also revealed that the Fed was busy working with researchers from MIT on a potential stablecoin implementation. Moreover, Powell was also involved in a BIS panel discussion last year where he talked about the risks that are involved with cryptocurrency and the benefits that come from a state-issued CBDC.
In Feb 2021, the analyst highlights that Jerome was back in Congress talking about cryptocurrencies. On CBDCs he said: “This is something we’re investing time and labor in, across the Federal Reserve system.”
“In the summit, he also talked about how Bitcoin could be seen as an alternative to Gold. He also took massive issue with private sector cryptocurrencies and stablecoins like Diem etc.”
How’s the future?
While the Fed was not too focused on cryptocurrencies when Jerome Powell started his tenure, the crypto KOL says that it’s pretty clear that things have changed.
“Didn’t matter whether it was Bitcoin or stablecoins. If it was not Fed issued, it was not safe,”
He further adds that what is clear though is that there is now a concerted effort to ease the public to the idea of a centrally issued digital dollar: “Not only have we seen this with their research on the matter but also by the public statements by the chairman and those who work with him, it also seems to be coming at a time when the other regulators are jumping on the regulation bandwagon.”