Despite Powell's Virtual Currency 'Targeting', Coinbase Celebrates Nasdaq 'Fireworks'

"Cryptocurrency is a speculative vehicle" "It is a speculative tool and cannot function as currency"
Coinbase records $100 billion market cap on first day of listing

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Baek Jong-min] Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), strongly criticized cryptocurrencies as "vehicles for speculation." Despite Chairman Powell's "attack," Bitcoin prices hit an all-time high that day, and cryptocurrency exchange Coinbase successfully completed its first day of trading.

On the 14th (local time), Powell expressed his view that cryptocurrencies have not yet attained the status of a payment method during an interview with the Washington DC Economic Club, CNBC reported. Powell's remarks came just before Coinbase began trading.

Powell said, "Cryptocurrencies are really a means for speculation," adding, "They are not actively used as a payment method." He emphasized that cryptocurrencies are more of an investment target than a currency functioning as a medium of exchange.

He also compared cryptocurrencies to gold, noting, "For thousands of years, people have attributed special value to gold that it does not actually possess."

In a remote panel discussion hosted by the Bank for International Settlements (BIS) last month, Powell also stated, "Cryptocurrencies are highly volatile, so they are not a useful store of value," and added, "They are basically speculative assets closer to substitutes for gold rather than the dollar."

Despite Powell's remarks, Coinbase's listing on the Nasdaq market that day was successful.

Coinbase, which directly listed on Nasdaq that day, started trading at $381 per share, much higher than the reference price of $250, and surged to an intraday high of $429.

Afterward, as selling increased, the rise slowed, and the first day of trading closed at $328, lower than the opening price.

Based on the opening price, Coinbase's market capitalization was $99.6 billion, and it surpassed $100 billion intraday, but closed at $85.8 billion. Bitcoin prices also reached $64,000 at one point that day.

[Image source=AP Yonhap News]

Meanwhile, in the interview, Chairman Powell mentioned that the Fed would begin tapering asset purchases well before raising the benchmark interest rate.

He explained, "We will taper asset purchases when we have made substantial additional progress toward our goals," adding, "This point will probably be considerably earlier than when we consider raising interest rates."

This was interpreted as a continuation of the path of monetary policy normalization that the Fed chose after the 2008 global financial crisis.