Federal Reserve Chair Jerome Powell told Congress on February 13 that the central bank will not bail out the crypto industry, yet Bitcoin and Ethereum prices rose sharply. Bitcoin climbed over 3% to near $64,600, while Ethereum surged more than 5% above $1,875.
Powell's Clear Message on No Crypto Rescue
Testifying before lawmakers, Powell stated, "We will not bail out anyone, including crypto," emphasizing the Fed should never become a bailout institution. The remarks reinforced the Fed's stance that it will not act as a safety net for digital assets during crises.
Market Reaction Defies Hawkish Tone
Despite Powell's firm message, major cryptocurrencies rallied. Ripple (XRP) rose about 3% to around $1.10, and total crypto market capitalization increased 2.5% to $2.22 trillion. The price action suggests the market is more sensitive to risk appetite and short-term supply-demand dynamics than to policy rhetoric.
However, investor sentiment remains cautious. The Fear & Greed Index stayed at 33, still in "fear" territory, indicating the rally may be more of a rebound than a conviction-driven uptrend.
Inflation and Monetary Policy Context
Powell also addressed inflation, calling it a matter of monetary policy choices rather than short-term price swings or external uncertainty. He expressed confidence that proper policy management could make the high inflation of the past five years a thing of the past.
Powell has previously criticized some crypto projects but expressed no major concerns about Bitcoin itself. He disclosed he would divest personal blockchain-related investments after becoming Fed chair.
The key takeaway is that the Fed will not backstop crypto, reinforcing its status as an asset class without government guarantees. Yet the market's positive response highlights that near-term trading flows and risk appetite currently outweigh policy risks.