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Bitcoin is still not big enough to destabilize an economy, Fed nominee Powell says

  • "They don't really matter today; they're just not big enough," Fed chair nominee Jerome Powell said.
  • Cryptocurrencies have become very popular over the past year as their values have skyrocketed.
  • But their market caps are still much smaller than that of the S&P 500 index.

A fall in cryptocurrencies wouldn't be enough to destabilize an economy, Federal Reserve chair nominee Jerome Powell said Tuesday.

"They don't really matter today; they're just not big enough. There isn't close enough volume to matter," Powell told the Senate Banking Committee at his confirmation hearing for the central bank's top job. Trump picked Powell to succeed current Chair Janet Yellen once her term ends in February.

Cryptocurrencies have become very popular over the past year as their values have skyrocketed. Bitcoin and ethereum — two of the most widely traded cryptocurrencies, are up 1,255 percent and 5,000 percent, respectively.

Bitcoin in past year

Source: CoinDesk

But despite their massive surges, bitcoin's market cap is $168 billion, while ethereum's totals $45.3 billion, according to Coinmarketcap. By comparison, the S&P 500's market cap is well in the trillions of dollars.

Some of the most well-known figures on Wall Street, including Fundstrat's Tom Lee and value investor Bill Miller, have warmed up to cryptocurrencies, more specifically to bitcoin. Others, however, are still not sold on crypto. On Monday, Citadel's Ken Griffin told CNBC that bitcoin may be in a bubble.

Powell said Tuesday that "in the long, long run, cryptocurrencies and things of that nature could matter," adding that blockchain — bitcoin's underlying technology — could be something that "may have significant applications in the wholesale payments part of the economy."