Fed "Cannot Own Bitcoin"…Price Temporarily Falls Below $100,000

Trump Draws Line on 'Strategic Asset Reserve'

Powell "Not Expecting Legislative Changes from Congress"

Skepticism on Bitcoin's Intrinsic Value 'US Rate Cut Moderation'

The price of Bitcoin temporarily fell below $100,000. This is due to remarks by Jerome Powell, the Chairman of the US Federal Reserve (Fed), stating "We cannot own Bitcoin." In Korea, the price fell below 150 million won. With the Fed openly opposing, the implementation of President-elect Donald Trump's 'Bitcoin Strategic Asset Reserve' pledge is expected to face difficulties.

According to CoinMarketCap on the 19th, Bitcoin recorded $99,579 at around 11 AM. It has been a week since Bitcoin traded in the $90,000 range since the 13th. Bitcoin had reached an all-time high of $108,268 just two days ago, but the upward trend was halted. In the domestic market, it fell to 147,189,000 won at the same time.

The sharp decline in Bitcoin was triggered by Powell's remarks at a press conference following the Federal Open Market Committee (FOMC) meeting on the 18th (local time), where he stated that "it is a matter for Congress to consider, but the Fed does not expect legislative changes" regarding Bitcoin reserves. This publicly indicated that the Fed would not cooperate with President-elect Trump's plan to reserve Bitcoin as a strategic asset.

Powell's reluctance is analyzed to be due to the limitations of Bitcoin as an asset. Skepticism about Bitcoin's intrinsic value remains. The value of Bitcoin, which was created in 2008, is considered to have a short history as an asset to predict long-term appreciation. The US accumulates reserve assets to ensure dollar value stability and liquidity in times of crisis, but Bitcoin's volatility makes it unsuitable as a reserve asset. The US reserve assets include foreign currencies such as the Euro and Yen, gold, and the International Monetary Fund (IMF) Special Drawing Rights (SDR).

Some speculate that President-elect Trump could issue an executive order to purchase Bitcoin using the US Treasury's Exchange Stabilization Fund as a reserve like oil. However, the Exchange Stabilization Fund is primarily used for foreign exchange market intervention and dollar stabilization. Given its purpose, congressional approval is likely needed.

There is also talk of the US government directly purchasing Bitcoin from the market. In this case, the US government would need to issue bonds to raise funds, but considering the fiscal deficit, it would not be easy.

President-elect Trump recently stated that he would not prematurely dismiss Chairman Powell. Powell's term runs until May 2026. It is likely that President-elect Trump will not be able to secure cooperation from the Fed for a considerable period after taking office.

Reporter Mi-hyun Cho mwise@hankyung.com