Cryptocurrency Market Plummets: Bitcoin Drops Below $95,000, Ethereum Down Over 11%

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The cryptocurrency market experienced a sharp decline on December 20, with Bitcoin falling below $95,000 and Ethereum dropping over 11%. This downturn follows comments by Federal Reserve Chair Jerome Powell, who emphasized that the Fed has no plans to hold Bitcoin as part of its reserves.

Key Market Movements

Powell's Stance on Bitcoin

During the December Federal Open Market Committee (FOMC) meeting, Chair Powell clarified:

"The Federal Reserve Act prohibits us from owning Bitcoin. We have no intention to change this policy or advocate for legislative amendments—that’s Congress’s role."

He further dismissed speculation about U.S. government-led Bitcoin accumulation, citing legal and operational constraints.

Political Context

Former President Donald Trump’s proposal for a "Bitcoin strategic reserve" has stirred debate. Supporters argue it could bolster the U.S. financial position, while critics highlight Bitcoin’s volatility as a barrier to its use as a reserve asset.

Republican Senator Cynthia Lummis drafted a bill to allocate federal funds toward purchasing Bitcoin, aiming for a 1-million-Bitcoin reserve. However, analysts predict strong opposition from the Fed.

Why This Matters

  1. Regulatory Clarity: Powell’s remarks reinforce the Fed’s cautious approach to cryptocurrencies.
  2. Market Sentiment: Political support for crypto could drive long-term adoption but faces institutional hurdles.
  3. Investor Caution: Volatility remains a critical concern for both traders and policymakers.

FAQs

Q: Why did Bitcoin and Ethereum prices drop suddenly?
A: The decline followed Powell’s comments and broader market corrections, reflecting investor sensitivity to regulatory signals.

Q: Could the U.S. government legally hold Bitcoin reserves?
A: Not without Congressional action to amend the Federal Reserve Act, which currently prohibits such holdings.

Q: How might Trump’s Bitcoin reserve plan work?
A: It would require Treasury bond issuance and Congressional approval—a process likely to face Fed resistance.

Q: Is Ethereum’s drop tied to Bitcoin’s performance?
A: Yes. Major cryptocurrencies often move in tandem due to correlated market dynamics.


👉 Explore real-time crypto market trends
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Note: This analysis is for informational purposes only and not investment advice.


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