Jerome Powell has been nominated to lead the Federal Reserve in 2022, and many analysts believe this could bear serious repercussions for the cryptocurrency space.
Powell Might Not Be Great for Crypto, Analysts Claim
While Powell is all set to lead the Federal Reserve, his counterpart vice chairwoman may be Lael Brainard. Both nominations will need to be confirmed by a majority vote in the Senate. Powell served as the Federal Reserve chair under President Donald Trump, so this won’t be a new position for him.
Why then, are so many analysts believing that his presence in the world of finance could ultimately take crypto in a new – and possibly negative – direction? Winston Ma – author and managing partner of Cloud Tree Ventures – says that Powell is likely to face a lot of opposition to progressives, which could mean that crypto regulation may not be applied in a way that will directly assist investors.
The potential change of the [Federal] Reserve chairman could mean a significant change to the U.S. monetary expansion policy, crypto regulation, and US digital currency agenda. All these can disrupt the crypto trading market dramatically.
David Lesperance – managing partner of immigration and a tax adviser at Lesperance & Associates – also threw his two cents in. While his words did not directly pertain to Powell, he was careful to let traders know that they must choose their cryptocurrencies wisely and thus be wary of those who could help them attain more from their investments. He says:
As the holidays approach, crypto enthusiasts should take a few minutes to rewatch the bank run scene from ‘It’s a Wonderful Life’ and apply its lessons to their own investments. Until the regulatory wildfire clears out the underbrush of unstable exchanges, cold wallets may be the modern equivalent of keeping your assets under the mattress.
Halvings Will Work Well
Christopher Vecchio – a senior strategist at Daily FX – was quick to say that granted more bitcoin halving events take place in the future, more value will be locked up in the crypto mining process, and the rate in which bitcoin is extracted from the blockchain and put into circulation will be reduced. He says:
After each of the first three halving events, bitcoin prices rallied thereafter for about one and a half years. In each case, bitcoin prices were up sharply relative to their pre-halving value. With demand for bitcoin increasing rapidly in recent months, the next halving event – a supply-limiting occurrence – could help revive bitcoin’s upward trajectory despite losses that have accumulated in recent weeks. [It] shouldn’t come as a surprise when more calls for ‘bitcoin $100,000’ come out of the woodwork once the halving event is complete.
The crypto space has grown heavily as of late, with bitcoin just a few weeks ago reaching a new all-time high of approximately $68,000.