Bitcoin Price Plummets as DOJ Investigates Fed Chair Powell; What's Next?

Bitcoin’s price declined to around $90,000 as of 2026-01-12 amid uncertainty surrounding a Department of Justice (DOJ) criminal investigation into Federal Reserve Chair Jerome Powell. The investigation, confirmed by Powell in a Sunday statement, centers on allegations of misleading Congress about the renovation of the Fed headquarters. Powell described the probe as politically motivated and a direct attack on the central bank’s independence.

The DOJ investigation has added a new layer of uncertainty to the macroeconomic outlook. Investors are already weighing the Fed’s January policy decision and the potential for rate cuts in early 2026. The Federal Reserve is expected to hold rates steady at its January meeting, with a 40% chance of a rate cut in March priced into markets.

Bitcoin’s weekly chart shows the price consolidating around the 100-week Exponential Moving Average (EMA) at $86,025. If BTC continues to hold above this level, it could move toward the 50-week EMA at $97,631. However, the RSI on the weekly chart remains below the neutral level of 50, indicating bearish momentum is still in control.

Why Did This Happen?

The DOJ investigation into Powell has raised concerns about the Fed’s ability to maintain its policy independence. The case could set a dangerous precedent, allowing executive-level pressure to influence monetary decisions. Tim Sun, a senior researcher at HashKey Group, said this scenario could destabilize the dollar system and benefit decentralized assets like Bitcoin.

Powell framed the probe as an attack on the Fed's autonomy, asserting that the DOJ is attempting to pressure the central bank into lowering interest rates. The investigation is being led by U.S. Attorney for the District of Columbia Jeanine Pirro, a Trump appointee, a detail that has drawn political backlash from the President’s own party.

How Did Markets React?

Bitcoin traders have remained cautious as the market waits for clarity on the DOJ case and other key events, including a potential Supreme Court ruling on Trump’s tariffs. BTC/USD has been trading in a rangebound pattern, hovering near $90,000 with no clear directional bias.

Ethereum and other altcoins have also seen mixed performances, with Ethereum trading between $3,000 and $3,300 and XRP sliding below $2.05. Futures Open Interest for both tokens has declined, reflecting reduced retail demand and increased uncertainty among traders.

Gold and silver have gained ground, rising nearly 2% and 5% respectively, as investors seek safe-haven assets amid rising geopolitical and regulatory uncertainty.

What Are Analysts Watching Next?

Analysts are closely monitoring a number of key catalysts. The U.S. Department of Justice’s case against Powell could trigger a long-term re-evaluation of Bitcoin as a hedge against compromised monetary institutions.

Jimmy Xue, co-founder and COO of quantitative yield protocol Axis, noted that Bitcoin’s perceived neutrality is attracting institutional capital seeking protection from political and legal risks.

The market is also waiting for the outcome of the Supreme Court’s tariff decision. A ruling in favor of striking down Trump’s tariffs could reshape trade policy and affect global markets, including crypto.

Bitcoin’s technical outlook remains mixed. A break above $95,000 would be a critical milestone for bulls, potentially unlocking further gains toward $100,000. However, a close below $90,000 could extend the decline toward $85,569, according to weekly and daily technical indicators.

In the broader economic landscape, the Federal Reserve’s policy path remains a central focus. The U.S. employment report due in the coming days will provide further insight into the labor market and the trajectory of interest rate cuts in 2026.