Jerome powell He is the current governor of the Federal Reserve (FED), the central bank of the United States.
All options regarding the monetary policy of the US dollar inevitably pass through it. However, these policies not only affect the value of the dollar and the US economy, they also have direct and indirect impacts on many other assets.
In particular, Powell is able to influence US dollar inflation, that is, in the loss of purchasing power of the currency administered by the central bank that it directs.
For example, the average annual price increase in the US over the past ten years has almost always been more than 1%, except for 2015 and briefly 2020.
In contrast, over the past 25 years, it has often fluctuated around 2%, with a dramatic and temporary setback due to the 2008 financial crisis.
While it's not just the Fed's monetary policy that has an impact on inflation, it certainly plays an important role.
For example, when comparing the inflation curve of the last fifteen years with that of the Fed's budget expansion, it is quite clear that the two short periods of maximum budgetary expansion, that is, the end of 2008 and March 2020, were followed by an increase in inflation.
The fact is that these sudden and significant increases in the Fed's balance sheet were the result of the creation from scratch of a large amount of dollars which, once placed on the market, were able to bring inflation to more normal levels in a short period of time, after two sensational, unexpected and dangerous collapses.
Therefore, it is clear that the Fed's monetary policy, currently led by Jerome Powell, is capable of influencing dollar inflation.
Jerome Powell and the effects of Fed policies on Bitcoin
This dynamic is definitely relevant for Bitcoin too, because, on the one hand, the US dollar is the reference currency of the whole world, to the extent that even the price of BTC globally is measured in US dollars, while on the other hand, Bitcoin was created precisely as an attempt to protect one of the savings from inflation.
Therefore, the more Powell pushes for dollar inflation to rise, or remain relatively high, the more it should benefit, as a consequence, also the price of bitcoin.
In fact, in addition to Bitcoin's fixed monetary policy, perhaps the Fed's monetary policy is the second single factor with the greatest impact on the price of BTC.
In light of this, and considering that Bitcoin's monetary policy is indeed immutable, today Jerome Powell is probably the person with the greatest power to influence the price of BTC.
In a similar context, Anthony Pompliano's comments take on some relevance:
“They are literally cutting rates and printing money directly on the bitcoin halving. Amazing".
In other words, in the same year that the automatic halving of the creation of the new BTC took place, Jerome Powell's Federal Reserve launched a new expansion plan with the creation and release of a huge amount of dollars.
This decision could have consequences on the price of bitcoin greater than any other action or phenomenon that occurred during 2020. In summary, Powell and the Fed could have generated a new bull run of the price of BTC.