Fed Chair Powell Confirms US Banks Can Serve Crypto Clients as Bitcoin Rises
Bitcoin reached a new milestone of $105,000 on Thursday following the Federal Reserve's latest policy meeting, where Chair Jerome Powell confirmed that US banks can provide services to cryptocurrency clients. The price surge came after a brief dip to $101,800 on Wednesday, putting the leading cryptocurrency just 4% below its recent record high of $109,241.
The Federal Reserve maintained its benchmark interest rate at the target range of 4.25% to 4.50% during the Federal Open Market Committee meeting. This decision aligned with market expectations, and traders are now predicting an 82% chance that rates will remain unchanged at the next policy meeting in March. The central bank's stance follows last year's rate cuts, which reduced the federal funds rate by 100 basis points.
During the post-meeting press conference, Powell stated that banks under Federal Reserve supervision can work with cryptocurrency customers if they properly manage associated risks. He stressed the importance of maintaining "safe and sound" practices in these operations. This statement provided clarity on the regulatory environment for traditional financial institutions looking to engage with digital assets.
The cryptocurrency market showed broad strength, with Ethereum rising 2.5% to $3,210 and Solana gaining 3.7% to reach $240. These gains occurred despite recent pressure on technology stocks, with companies like Nvidia and Microsoft experiencing declines following news about Chinese AI developments. The broader market saw the Nasdaq temporarily drop more than 1% after the Fed's announcement.
Powell addressed the current economic situation, noting that while inflation has decreased significantly from its 2022 peak of 9.1% to 2.9% annually, uncertainty remains about future rate adjustments. This cautious approach to monetary policy continues to influence market dynamics across various asset classes.
In a related development, Czech National Bank Governor Aleš Michl announced plans to propose adding bitcoin to the nation's central bank reserves. While confirming the proposal on social media, Michl explained that more analysis would be needed before any final decision. The bank is already diversifying its reserves by increasing gold holdings to 5% and planning to allocate 30% to equities, with bitcoin being considered as a potential addition due to its lack of correlation with bonds.
