Jerome Powell's Fed Term Ends in 3 Days: What Did He Do for Crypto?
TL;DR
Jerome Powell's term as chair of the Federal Reserve ended on May 15, 2023, marking a significant period for cryptocurrency. His influence was felt through monetary policy decisions that affected liquidity and market conditions for crypto assets.
Key points
- Jerome Powell's term ended on May 15, 2023
- Powell's influence on crypto was through monetary policy
- Bitcoin prices fell significantly during Powell's tenure
On May 15, Jerome Powell's tenure as chair of the Federal Reserve came to an end, bringing to a close one of the most significant periods of monetary policy in the history of cryptocurrency.
Powell's effect in the office
Powell took office as Fed chair on February 5, 2018, and on May 23, 2022, he took office for a second four-year term. Powell's legacy in the cryptocurrency community was never one of overt support or animosity. His actual influence was felt through liquidity.
The Fed continued to tighten policy and reduce its balance sheet in 2018, contributing to the harsh risk-off environment. After the 2017 bubble, Bitcoin was already weaker going into Powell's first year, and it spent most of 2018 plummeting from close to $20,000 to about $3,000.
Then came 2020. Powell's Fed lowered interest rates to almost zero and provided significant liquidity support during the crisis. Everything changed as a result. As cheap money, stimulus, institutional demand, and speculative appetite poured into risk assets, Bitcoin rose from a panic low below $4,000 in March 2020 to over $60,000 in 2021.
Leading the charge
Powell, however, also came to represent the turnaround. The Fed began one of the fastest rate-hiking cycles in contemporary American history in 2022 to combat inflation. Cryptocurrency paid the price. After tightening collided with excessive leverage, leading to the collapse of Terra, Three Arrows Capital, Celsius, and FTX, Bitcoin dropped from its 2021 peak near $69,000 to less than $16,000.
Powell generally viewed cryptocurrency as something that required regulation, rather than outright prohibition. In January, the Fed published its CBDC discussion paper. Powell stated that the central bank wanted a public discussion on the advantages and disadvantages of a digital dollar. Subsequently, the Fed emphasized that it had not decided on a CBDC and that it would require congressional approval before issuing one.
Q&A
What impact did Jerome Powell have on cryptocurrency during his tenure?
Jerome Powell's impact on cryptocurrency was primarily through monetary policy decisions that influenced liquidity and contributed to a risk-off environment.
How did the Federal Reserve's policies under Powell affect Bitcoin prices?
Under Powell, the Federal Reserve's tightening policies contributed to a decline in Bitcoin prices, dropping from nearly $20,000 to around $3,000 in 2018.
When did Jerome Powell start and end his term as Fed chair?
Jerome Powell began his first term as Fed chair on February 5, 2018, and his second term ended on May 15, 2023.
