Bitcoin experienced significant volatility on December 19th after Federal Reserve Chair Jerome Powell made critical comments about the central bank's inability to hold Bitcoin legally. The cryptocurrency briefly dipped below the psychological $100,000 threshold before stabilizing.
Key Market Movements:
- Bitcoin dropped 2.2% to $98,760.18 before recovering to $101,772.89 (+0.8%)
- Market sentiment weakened by Powell's hawkish signals about interest rates
- The Fed simultaneously reduced its 2025 rate cut projections to 50 basis points
Powell's Policy Bombshell
During the post-meeting press conference, Powell addressed questions about potential Fed involvement in a strategic Bitcoin reserve under a potential Trump administration:
"We're not permitted to hold Bitcoin. This would require Congressional action, which the Fed isn't seeking to change."
The statement came amid discussion of former President Trump's proposal to establish a national Bitcoin reserve using approximately 200,000 BTC (~$21B) confiscated from criminal operations.
The Strategic Reserve Debate
Senator Cynthia Lummis (R-WY) has proposed legislation that would:
- Create a national Bitcoin reserve
- Authorize annual purchases of 200,000 BTC
- Target 1 million BTC accumulation
- Fund through Fed bank deposits and gold reallocation
Analysts at Barclays predict significant hurdles:
- Would require Congressional approval
- Likely necessitate new Treasury bond issuance
- Expected to face strong Fed opposition
FAQ: Understanding Bitcoin's Fed-Sensitive Market
Q: Why did Bitcoin drop below $100K?
A: Combination of Powell's hawkish rate outlook and explicit rejection of Fed Bitcoin holdings.
Q: What's a strategic Bitcoin reserve?
A: A government stockpile of BTC proposed by Trump/Lummis to potentially back the dollar.
Q: How might this affect crypto regulations?
A: Signals that major policy changes would require Congressional action, not Fed discretion.
Q: Where can I track Bitcoin's real-time price?
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