Bitcoin Shows Strength as US DOJ Mulls Fed Chair Investigation

Bitcoin (BTC) is trading above $90,000 after rising to an intraday high of $92,519. The recent upswing appears to be driven by crypto investors downplaying the U.S. Department of Justice's (DoJ) criminal investigation into Federal Reserve Chair Jerome Powell according to reports.

The investigation was confirmed by Powell himself in a statement issued over the weekend. Federal prosecutors have opened a criminal inquiry into his testimony regarding the renovation of the Fed headquarters.

The move has raised concerns about the independence of the Federal Reserve. Powell stated that the investigation reflects efforts by the Trump administration to pressure the central bank into adjusting interest rates.

Why Did This Happen?

The investigation centers around Powell's June testimony about the $2.5 billion renovation of the Fed's headquarters. The Federal Reserve chair has argued that the probe is part of an ongoing political struggle over monetary policy.

Trump has denied any involvement in the investigation and criticized Powell's leadership. Some administration officials have claimed the DOJ's actions are not politically motivated.

How Did Markets Respond?

Bitcoin has held steady above $90,000, while Ethereum (ETH) and XRP have also seen some gains before trimming them. Altcoins such as Monero (XMR) have surged, with Monero hitting an all-time high.

The U.S. Dollar Index (DXY) has fallen as investors worry about the Fed's independence. Gold and other precious metals have surged, with gold prices hitting record highs.

The stock market initially reacted negatively, with futures on the Dow Jones Industrial Average falling sharply. However, the market quickly recovered, with the S&P 500 closing at a record high.

What Are Analysts Watching Next?

Analysts are watching how the investigation affects the Fed's policy decisions. The central bank is expected to hold off on further rate cuts in the coming months.

Treasury Secretary Scott Bessent has expressed concern that the investigation could cause market volatility. He has previously warned that removing Powell from his position could also cause instability.

Investors are also monitoring the geopolitical situation, particularly in Iran and Venezuela, as these factors could further impact global markets.

Precious metals are being closely watched as safe-haven assets. Analysts suggest that gold's long-term outlook remains positive, despite short-term risks.

The upcoming U.S. Consumer Price Index (CPI) data will be closely monitored for further clues about the Fed's monetary policy path.

The market is also looking for a replacement for Powell, whose term as Fed Chair ends in May 2026. Trump is expected to nominate a candidate more aligned with his policy views.

Analysts at ING and Julius Baer have highlighted the potential for increased volatility in the dollar and other asset classes as the situation develops.