Prologue: The person who pressed the nuclear button
On March 16, 2022, at 2 PM, Federal Reserve Chairman Jerome Powell took the stage. His fingers trembled slightly, a detail captured by 4K cameras and repeatedly aired on financial channels, before announcing the start of the most aggressive interest rate hike cycle in thirty years. In that moment, $12 trillion in global market value evaporated, Bitcoin plummeted 9% in a single day, and a financial tsunami engulfing all risk assets officially landed.
But few know that just the night before, this man known as the 'Financial Tsar' had been repeatedly stroking the first edition (Federal Reserve Act) he purchased in 1987 in his study. On the title page, he had written a note in his own handwriting: 'The job of a central banker is to quietly take away the wine glasses just as the party is getting started.' And at this moment, he was preparing to smash the entire banquet hall.
Chapter 1: The Ambition of Lawyers (1975-2012)
1.1 The Awakening of Georgetown Law School
In 1975, in Washington D.C., 22-year-old Powell was burning the midnight oil in the Georgetown Law School library preparing for a constitutional exam. He told his classmates, 'The law is the operating system of society.' This statement later evolved into his core philosophy: the financial system needs code-like precise rules.
After graduating, he entered a top law firm on Wall Street, where he participated in designing the first asset securitization products of the 1980s. This experience gave him insight into the double-edged nature of financial innovation, which can create liquidity and also sow the seeds of crisis.
1.2 The Tempering of the Treasury Period
In 1992, 39-year-old Powell handled the Mexican peso crisis as Assistant Secretary of the Treasury. In an emergency meeting, he looked at the real-time exchange rate curve and said, 'When the market is panicking, what is needed is precise intervention like a syringe, not a fire hose.' This statement foreshadowed his quantitative easing strategy in response to the pandemic thirty years later.
During this time, he was deeply involved in the revision of the Glass-Steagall Act, which shaped his unique understanding of regulation: 'Good regulation should be like a software update, fixing vulnerabilities without rebooting the entire system.'
Chapter 2: The Architect of Crisis (2012-2018)
2.1 The 'Outlier' of the Federal Reserve
When Obama nominated Powell to the Federal Reserve Board in 2012, the Wall Street Journal called it 'a safe but boring choice.' At that time, no one anticipated that this former lawyer, who always took detailed notes in meetings, was constructing an unprecedented crisis response framework.
During the taper tantrum of 2013, he privately told colleagues, 'The liquidity tsunami we create will one day need to recede precisely.' He began secretly assembling a team of 30 economists to model extreme monetary policy exit scenarios, which later became known as the prototype for the 'Powell Toolbox.'
2.2 The 'Unintentional Father' of Cryptocurrency
When Bitcoin broke $10,000 in 2017, newly appointed Chairman Powell was asked about cryptocurrencies during a congressional hearing. His response was etched on the homepage of CoinDesk: 'This is more like a speculative asset than a currency, but it does not affect our execution of monetary policy.'
This seemingly understated characterization, however, produced a butterfly effect:
The next day, Goldman Sachs announced the establishment of a digital currency trading department
Within a week, over 200 hedge funds incorporated Bitcoin into their asset allocation models
Three years later, as the Federal Reserve's balance sheet expanded from $4 trillion to $9 trillion, Bitcoin became the 'digital gold' target for institutions fighting inflation premiums
He never expected that the easing flood he created would nourish the crypto ecosystem trying to disrupt the traditional financial system.
Chapter 3: The 'God Mode' During the Pandemic (2020-2021)
3.1 Nuclear-Level Easing
On March 23, 2020, the Federal Reserve announced unlimited QE. In the crisis war room, Powell pointed to the real-time plunge of the S&P 500 index curve and said, 'What we need to do today is not to adjust the water temperature, but to prevent the entire pool from freezing.'
In the next 18 months:
The Federal Reserve purchased over $4 trillion in assets
The balance sheet expanded to a record high of $8.9 trillion
The M2 money supply grew by 25% year-on-year
The crypto market ushered in an epic prosperity:
Bitcoin rose from $3,800 to $69,000
The total locked value in DeFi surged from $600 million to $180 billion
The NFT market transformed from a marginal experiment into a $30 billion industry
3.2 Dangerous Indulgence
In May 2021, when inflation began to show signs, Powell said in an internal meeting: 'The cost of tightening too early is much greater than correcting later.' This judgment extended the loose policy for a crucial three months and also gave rise to the most frenzied bubble phase in the crypto market:
Dogecoin surged 300 times in six months
The 'Squid Game' token crashed 99.99% in one day
The total crypto market cap reached a peak of $3 trillion in November 2021
Later, he wrote in a draft of his memoir: 'We were like injecting adrenaline into the economy, knowing there would be side effects, but at that moment the top priority was to prevent the heart from stopping.'
Chapter 4: The Brutal Turn of the Inflation Fighter (2022-2024)
4.1 The Interest Rate Bomb
On the night of June 2022, when the CPI reached 9.1%, Powell watched the crypto market data screen in his office:
Bitcoin had halved from its peak
The Luna/UST ecosystem had just completed a $60 billion collapse
Cryptocurrency lending platforms like Celsius began to experience runs
He emailed his team: 'When the tide goes out, the naked swimmers will naturally be exposed. Our job is to let the tide recede in an orderly manner.'
In the following 22 months, the Federal Reserve raised interest rates 11 times, with the benchmark rate soaring from 0-0.25% to 5.25-5.5%. The crypto market endured a purgatory:
A total market value evaporated by $2.2 trillion
Over 300 crypto companies went bankrupt
But Bitcoin's hash rate reached a new high, and Ethereum successfully completed its merger upgrade
4.2 The 'Stress Test' of Crypto
In March 2023, during the Silicon Valley Bank crisis, the crypto industry demonstrated remarkable resilience:
USDC briefly depegged but recovered within 24 hours
The decentralized stablecoin DAI remained fully pegged
Bitcoin rose 35% in one week during the banking crisis
Powell first acknowledged in a Senate hearing: 'Certain blockchain applications demonstrate the transparency that traditional finance lacks.' This statement was interpreted as a subtle shift in the Federal Reserve's attitude towards crypto.
Chapter 5: The Interest Rate Cut Cycle and the New Era of Crypto (2024-)
5.1 The Delayed Shift
In December 2024, when Powell announced the start of an interest rate cut cycle, the crypto market reacted dramatically:
Bitcoin fell instead of rising, dropping over 7% in one day
'Sell the news' market confirms that the market has long priced in
But institutional funds continued to flow in through ETFs
This differentiation reflects deep changes: cryptocurrencies are shifting from macro liquidity indicators to an independent asset class.
5.2 Legacy and Paradox
The financial environment created during Powell's tenure unexpectedly nurtured the crypto industry:
Zero interest rates gave rise to the DeFi yield farming craze
Fiscal stimulus drove retail FOMO sentiment
The interest rate cycle forced the industry to deleverage and optimize infrastructure
He perhaps also did not anticipate that one of the greatest legacies of his policy would be to accelerate the integration of traditional finance and crypto finance:
BlackRock's Bitcoin ETF assets under management exceeded $30 billion
J.P. Morgan conducted repurchase transactions on Ethereum
BNY Mellon custodied over $100 billion in crypto assets
Epilogue: Judge or Midwife?
In early 2025, as he was about to step down, Powell was asked in an interview about his views on cryptocurrencies. After a long pause, he said:
'The most important lesson I learned early in my career while handling the savings and loan crisis is that financial innovation always runs ahead of regulation. Cryptocurrency may be one of the most important financial innovations of this century, raising fundamental questions: What is money? How is trust established? How is value transferred?'
My job is not to embrace or stifle innovation, but to ensure that the entire system remains stable under the impact of innovation. Sometimes this means tolerating bubbles, and sometimes it means piercing them. History will judge whether our generation has found the right balance.
Outside, the neon lights of Wall Street intertwined with the indicators of Bitcoin mining machines, flickering in the night. The person who had reshaped the central bank with legal thinking ultimately became the most critical macro variable in the history of cryptocurrency. Each of his decisions inadvertently provided the most special nourishment for the industry attempting to disrupt the system he had maintained for his entire life.
When asked if he held Bitcoin, the former Federal Reserve Chairman revealed a rare sly smile: 'My compliance team advised me not to answer that question.'
In the narrative of the crypto world, Powell will forever exist as a complex figure: both the enabler of bubbles and the judge who pierces them; both the guardian of traditional order and an unwitting catalyst of disruptive innovation. This contradiction itself may be the most authentic footnote of our transitional era, where no one can remain an outsider between the old system and the new paradigm, not even the 'God' himself who holds the financial scepter.
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