On May 15, Jerome Powell concluded his term as Chair of the Federal Reserve.concluded With this, one of the most significant monetary policy eras in cryptocurrency history has come to an end.
Powell's influence in the office
Powell assumed the role of Federal Reserve Chair on February 5, 2018, and began his second four-year term on May 23, 2022. Powell’s reputation within the cryptocurrency community has never been reflected in overt support or hostility. His actual influence lies in... felt liquidity.
In 2018, the Federal Reserve continued to tighten monetary policy and reduce its balance sheet, intensifying market risk-off sentiment. After the 2017 bubble burst, Bitcoin had already weakened in Powell’s first year and plummeted from nearly $20,000 to around $3,000 for much of 2018.
Then came 2020. Under Powell’s leadership, the Federal Reserve lowered interest rates to near zero and provided massive liquidity support during the crisis. Everything changed. As cheap capital, stimulus measures, institutional demand, and speculative appetite flooded risk assets, Bitcoin’s price surged from a panic-induced low below $4,000 in March 2020 to over $60,000 in 2021.
Lead the charge
However, Powell also represented a shift in the landscape. The Federal Reserve began one of the fastest tightening cycles in modern U.S. history in 2022. Combatting inflation came at a cost to cryptocurrencies. Following the collision of monetary tightening and excessive leverage, companies such as Terra, Three Arrows Capital, Celsius, and FTX collapsed, and Bitcoin’s price dropped from a peak near $69,000 in 2021 to under $16,000.
Powell generally believes that cryptocurrency requires regulation rather than an outright ban. In January of this year, the Federal Reserve released a discussion paper on central bank digital currencies (CBDCs). Powell stated that the Federal Reserve seeks to engage in an open discussion about the advantages and disadvantages of a digital dollar. Subsequently, the Federal Reserve emphasized that it has not yet decided whether to issue a CBDC and would require congressional approval before doing so.
Powell's primary concern regarding cryptocurrencies is stablecoins. The Federal Reserve has advocated that similar financial activities should be subject to similar regulation, especially as cryptocurrency products begin to resemble money market instruments or bank deposits.
When Powell stepped down as chair, Bitcoin was trading at around $80,000, significantly higher than when he took office. However, the journey was turbulent, marked by crashes, surges in liquidity, inflation shocks, deleveraging, ETF-driven recovery, and the reemergence of macro sensitivity. His primary contribution to cryptocurrency was simple: he demonstrated that Bitcoin behaves more like a high-beta liquidity instrument than an isolated rebellious asset.