Bitcoin Rises as DOJ Investigates Fed Chair Powell

Federal Reserve Chair Jerome Powell announced on January 11, 2026, that the Department of Justice has opened a criminal investigation into the Federal Reserve, focusing on his June 2025 testimony regarding the $2.5 billion renovation of the Fed's headquarters. The investigation reportedly includes grand jury subpoenas and the threat of criminal indictment against Powell.

Powell described the investigation as a politically motivated effort by the Trump administration to exert pressure on the central bank to adjust its monetary policy. In a video statement, he stated that the actions were not about the renovation but rather about whether the Fed could continue to set interest rates based on economic evidence rather than political influence according to Powell.

The market reacted swiftly to the news, with U.S. stock futures dropping as investors anticipated a sell-off. The Dow Jones Industrial Average futures fell 215 points, or 0.4%, while S&P 500 and Nasdaq-100 futures also declined as market data shows.

Why Did This Happen?

The investigation centers on Powell's testimony before the Senate Banking Committee about the renovation project. Critics, including some lawmakers and political figures, have raised concerns over the project's cost and certain described features, labeling the project wasteful.

The Trump administration has long expressed dissatisfaction with the Federal Reserve's monetary policy, particularly its reluctance to lower interest rates aggressively. This tension has been a recurring theme, with Trump frequently criticizing Powell.

How Did Markets React?

Bitcoin surged in response to the news, with the price rising above $92,000. The cryptocurrency is often viewed as a hedge against uncertainty in traditional markets, and investors appear to be shifting assets into Bitcoin amid heightened geopolitical tension.

Precious metals also saw gains, with gold continuing its rally and reaching a record high. Analysts noted that gold and other metals often benefit from increased geopolitical uncertainty and a weakened dollar according to market analysis.

The U.S. dollar weakened broadly against other major currencies, and Treasury futures rallied as investors sought safer assets in the wake of the Fed-DOJ standoff as Reuters reported.

What Are Analysts Watching Next?

Market analysts are closely watching the outcome of the investigation and its impact on the Federal Reserve's independence. The potential for a criminal case against the Fed chair could create long-term uncertainty about the central bank's autonomy in setting monetary policy as economic analysts note.

The Federal Reserve's next meeting is scheduled for January 27 to 28, 2026. Analysts expect the central bank to remain cautious and wait for more economic data before making any major policy changes.

Investors are also looking forward to the upcoming release of inflation data and the Supreme Court's ruling on the legality of Trump's tariff policies. These factors could further influence market sentiment and the Fed's decision-making process as market watchers observe.