Fed’s Neel Kashkari Claims Bitcoin Still Worthless After 12 Years

Minneapolis Federal Reserve President Neel Kashkari has expressed skepticism toward Bitcoin, labeling it “worthless” despite its 12-year presence in financial markets. He also highlighted the resilience of the U.S. labor market and declining inflation rates, emphasizing that future Federal Reserve decisions would remain data-driven.

Kashkari criticizes Bitcoin’s viability

Kashkari, known for his candid opinions on cryptocurrencies, reiterated his belief that Bitcoin has failed to prove its value as a functional currency. Despite the growing interest in digital assets, he argued that Bitcoin has not established itself as a viable or reliable financial instrument. In contrast, he showed optimism for generative artificial intelligence, which he said has demonstrated potential within two years of development.

While Kashkari is antagonistic, Bitcoin has demonstrated notable price performance over time. The cryptocurrency saw significant gains in 2012, 2016, and 2020, with this year’s rise of 45%. However, Bitcoin’s volatility remains a concern, especially as the U.S. approaches what some analysts have dubbed the “Bitcoin elections” in 2024.

Kashkari also addressed broader economic issues, affirming that the U.S. labor market remains robust and inflation rates are downward. He argued that pushing unemployment higher to curb inflation would be detrimental, suggesting that reducing labor demand could significantly increase joblessness. His remarks indicate that the Fed will not take extreme measures to combat inflation, instead opting for a balanced approach based on economic data.

On the global front, Kashkari dismissed concerns that China poses a significant economic threat to the United States. He noted that the Chinese yuan is unlikely to surpass the U.S. dollar as the world’s reserve currency, reinforcing the dollar’s dominance in global financial markets.

Bitcoin’s market activity and ETF demand

Despite Kashkari’s skepticism, Bitcoin continues to attract investors’ attention. Recent data shows a surge in demand for U.S. spot Bitcoin exchange-traded funds (ETFs), with inflows totaling over $800 million between October 11th and October 14th. This growing interest suggests that institutional investors are looking for new ways to gain exposure to the asset.

However, according to CoinGecko, Bitcoin’s performance in the third quarter of 2024 was relatively stagnant, with prices up only 0.8%. Gold outperformed Bitcoin with a 13.8% increase, driven by concerns over a potential economic slowdown in the United States. Other asset classes, like the Japanese yen, also saw notable gains after the Bank of Japan raised interest rates in August.

According to CryptoQuant data, Bitcoin’s reserves on centralized exchanges are at an all-time low. As a result, investors are increasingly choosing non-custodial options to hold their cryptocurrency, signaling growing confidence in the asset.

The potential impact of 2024 U.S. elections on Crypto

The 2024 U.S. elections could significantly impact Bitcoin and the broader cryptocurrency market. Both leading candidates, Donald Trump and Kamala Harris, have pledged to foster a more crypto-friendly regulatory environment. Trump, in particular, has been vocal about his support for digital assets, promising to make the U.S. a global hub for cryptocurrency if re-elected. As Bitcoin continues to navigate a volatile market, its future performance will likely be influenced by the outcome of the elections and shifting investor sentiment.

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