Powell's criminal investigation raises uncertainty for the Federal Reserve, Bitcoin price remains strong

Jan 15, 2026 16:45:13

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On January 9, 2026, the U.S. Department of Justice launched a criminal investigation into Federal Reserve Chairman Jerome Powell, who claimed that the move was politically motivated pressure. As expectations for interest rate cuts have significantly cooled—market currently only expects a cut of 51 basis points in 2026—Bitcoin has begun to show signs of decoupling from traditional risk assets. Despite U.S. stock index futures falling by 0.4% to 0.7%, Bitcoin remained stable, even rising by 0.7%. Many analysts believe that growing concerns about the politicization of the Federal Reserve are reinforcing Bitcoin's role as a hedge against inflation and the risks of fiat monetary policy.

Background of Powell's Criminal Investigation and the Independence of the Federal Reserve

The criminal investigation into Jerome Powell is one of the most unusual events in the history of modern U.S. monetary policy. According to the disclosed timeline, the investigation was approved by U.S. Attorney Jenny Pirro in November 2025 and officially issued a grand jury subpoena to the Federal Reserve on January 9, 2026. Two days later, on January 11, Powell released a video statement via the Federal Reserve's official website, stating that the investigation was an unprecedented attempt to exert political pressure on monetary policy rather than a legitimate inquiry into misconduct.

At the heart of the investigation is Powell's testimony to Congress in June 2025 regarding a $2.5 billion renovation project for the Federal Reserve headquarters. The project, which began in 2022, was originally scheduled for completion in 2027 but has now exceeded its original budget by about $700 million. The Department of Justice stated that its primary task is to examine whether there has been any misuse of taxpayer funds and the accuracy of Powell's testimony before Congress. Powell strongly opposes this characterization, arguing that the renovation issue is being used as a political tool aimed at undermining the independence of the Federal Reserve.

Political Pressure, Trump, and the Transition of Federal Reserve Leadership

The investigation into Powell cannot be separated from the broader political context of U.S. monetary policy. The tension between Powell and Donald Trump has persisted for years, particularly regarding the timing and magnitude of interest rate cuts. Powell's term as Federal Reserve Chairman is set to expire in May 2026, and Trump has indicated plans to announce a successor in the near future.

Compounding the situation, Senator Thom Tillis has publicly opposed confirming any new Federal Reserve nominees before the investigation concludes, raising concerns about the overreach of judicial power and the erosion of institutional independence. As a result, investors are increasingly compelled to consider not only macroeconomic data but also the growing risk that monetary policy decisions may be influenced by political factors rather than economic fundamentals.

Expectations for Federal Reserve Rate Cuts in 2026 and Policy Uncertainty

Market expectations for Federal Reserve rate cuts in 2026 have changed significantly. As of January 12, 2026, data from the Chicago Mercantile Exchange (CME) FedWatch indicates a 95% probability that the Federal Open Market Committee (FOMC) will maintain interest rates at its January 28 meeting, while the probability of a 25 basis point cut is only 5%. For the March meeting, the probability of maintaining rates is 71.3%, while the likelihood of a cut has dropped to 27.6%, down significantly from over 50% a week earlier.

Currently, June 2026 is widely regarded as the earliest possible time for the first rate cut, with the market assigning a 73% probability to a 25 basis point reduction. Overall, expectations for easing policies in 2026 have been downgraded to only 51 basis points, whereas prior to the release of stronger-than-expected December employment data on January 9, the market had anticipated cuts of 70-80 basis points.

Although Powell's investigation did not immediately lead to a reassessment of the probability of rate cuts, it has significantly heightened concerns about policy uncertainty. Powell has explicitly linked this investigation to threats against the independence of the Federal Reserve, and the rise of the VIX index on January 12 reflects the growing demand for protection against macroeconomic and institutional risks.

Bitcoin Price Response and Its Decoupling from Traditional Risk Assets

During this period, Bitcoin's price movements have attracted widespread attention. From January 1 to January 6, Bitcoin's price surged from $87,520 to a weekly high of $93,927, an increase of 7.3%. After Powell's statement on January 11, Bitcoin's price fell back to $90,442, down 3.7% from its recent high. However, as news of the investigation spread, Bitcoin's price stabilized and rebounded to $91,884 at 2 AM (UTC) on January 12, marking a 0.7% increase within 24 hours.

This resilience stands in stark contrast to traditional risk assets. During the same period, Dow Jones index futures fell by 180-200 points, S&P 500 index futures dropped by 0.5%, and Nasdaq index futures declined by 0.7%. This divergence suggests that Bitcoin may be temporarily decoupling from the stock market, behaving less like a high-beta risk asset and more like a tool for hedging against macroeconomic and institutional uncertainties.

Bitcoin Technical Analysis and Derivatives Market Signals

From a technical perspective, Bitcoin's indicators remain generally positive. As of January 12, the 14-day Relative Strength Index (RSI) stands at 56.65, indicating neutral momentum with no signs of overheating. The Moving Average Convergence Divergence (MACD) histogram reading is 227.26, confirming a bullish crossover signal, while the price remains above the 12-day and 26-day exponential moving averages, further reinforcing short-term trend support.

Key support levels are at $87,200, $84,000, and a broader range between $72,000 and $68,000. On the upside, resistance levels are concentrated around $94,000, with additional resistance at $101,000, $104,000, and between $107,000 and $110,000. The 200-day simple moving average is at $106,174, still an important long-term resistance level.

Derivatives data provides further insights. The total open interest reached $61.86 billion, increasing by 0.91% within 24 hours, while the funding rates on major exchanges remain positive, indicating that long positions are paying fees to shorts. During the same period, total liquidations amounted to $22.03 million, with short liquidations significantly exceeding long liquidations, indicating ongoing upward pressure but also accompanied by higher leverage risks.

Cryptocurrency Market Sentiment, Federal Reserve Politicization, and Bitcoin Narrative

In the cryptocurrency community, the Powell investigation has reinforced several mainstream views. Despite recent cooling of interest rate cut expectations, many participants still believe that any eventual easing cycle will structurally benefit Bitcoin. More importantly, concerns about the politicization of the Federal Reserve are increasingly interpreted as support for Bitcoin's long-term value.

Bitcoin is gradually being viewed less as a speculative asset and more as a non-sovereign store of value aimed at hedging institutional credit risks. Some commentators believe that changes in Federal Reserve leadership could accelerate a shift toward more accommodative policies, further enhancing Bitcoin's appeal in a liquidity-driven environment.

Notable figures like Anthony Pompliano argue that the political pressure faced by the Federal Reserve could lead to a weaker stock market, increased volatility, a softer dollar, and strong performance from Bitcoin and gold—a trend partially reflected in early 2026 data.

Conclusion: Powell's Investigation, Federal Reserve Policy Risks, and Bitcoin's Strategic Role

The criminal investigation into Jerome Powell marks a significant escalation in the long-standing tension between political authority and central bank independence. While the official narrative is that the investigation focuses on a renovation project, it has intensified concerns about the potential politicization of monetary policy.

In the short term, Bitcoin's ability to hold above $90,000 amidst falling stock index futures indicates a significant shift in market perception. Bitcoin is no longer merely viewed as a risk asset but is increasingly seen as a tool for hedging institutional uncertainty and the risks of fiat monetary policy. Technical indicators and derivatives positions support this view, although leverage-related risks remain.

Looking ahead, this investigation adds new complexities to an already fragile macroeconomic environment. If leadership changes or political pressure accelerates a dovish policy shift, the resulting liquidity dynamics could provide significant mid-term benefits for Bitcoin. Ultimately, while this investigation has triggered short-term uncertainty, it may enhance Bitcoin's structural advantages as a hedge against the erosion of currency credibility.

The above views are referenced from 高手