After more than eight years at the helm of America’s central bank, Jerome Powell’s term ended on Friday, and he was replaced by the seventeenth Federal Reserve Chair, Kevin Warsh.
Given US President Trump’s growing public issues with Powell for refusing to lower the key interest rates, the POTUS’s new pick is expected to have a more open-minded approach to the institution’s monetary policy. He has also expressed support for BTC in the past, which has some altcoin fans questioning whether it extends to other crypto assets.
As such, we decided to ask one of the most popular AI models whether XRP, the third-largest non-stablecoin altcoin, could benefit as well.
Far More Nuanced
Gemini said that BTC benefits from being viewed as “digital gold,” but the landscape around utility-focused alts such as XRP under a Warsh-led Federal Reserve is “far more nuanced.” It added that the new Fed head is likely to bring a “mix of strict macroeconomic discipline and an open-minded approach to financial innovation that could uniquely impact the Ripple ecosystem.”
His pre-office disclosures revealed investments across the DeFi space, Layer-1 blockchains, and digital asset exchanges, which shows an appetite for cryptocurrency utility beyond just store-of-value propositions.
More importantly for XRP, Warsh has been vocal about the “modernization of money.” He has argued in the past that central banks must “proactively engage with digital currencies and has pushed for the US to consider a Central Bank Digital Currency to remain competitive, especially against initiatives like China’s digital yuan.”
Ripple has positioned the XRP Ledger to act as a neutral bridge asset for various CBDCs, which could benefit the underlying asset.
“A Fed Chair who is actively exploring the integration of digital, blockchain-based money into the traditional financial system provides a massive structural tailwind for Ripple’s core business model,” concluded Gemini for its bull case.
But There’s More
However, it’s not all promising and bullish predictions. The AI warned that Warsh has repeatedly noted that the explosion of alternative digital assets is largely a byproduct of loose monetary policy. XRP, similar to most altcoins, relies heavily on broad market liquidity.
Gemini believes capital is likely to become more expensive in the US as Warsh would want to reduce the Fed’s footprint in financial markets. In such tight liquidity environments, investors typically “flee from altcoins toward safer assets or bitcoin,” added Gemini.
If the new Fed Chair executes his vision of higher real rates and a smaller Fed balance sheet, XRP could “face severe downward price pressure as speculative capital dries up.”
The post Will XRP Skyrocket With Warsh Heading the Fed? Gemini Outlines Ripple’s Path Forward appeared first on CryptoPotato.