The news that the US Department of Justice is investigating Federal Reserve Chair Jerome Powell has renewed scrutiny over the central bank’s independence and the implications for investor confidence.
Over the past few days, gold prices have reached record highs while the dollar has weakened. Although the immediate impact on crypto has been limited, Bitcoin’s response may test whether it functions as a non-sovereign hedge or remains viewed primarily as a speculative asset.
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DOJ Probe Escalates Pressure On Fed
In an extraordinary video statement uploaded Sunday evening, Powell unveiled that US prosecutors are investigating him over the Fed’s renovation of its Washington headquarters.
The investigation marks the latest step in a year-long effort by the Trump administration to pressure the Federal Reserve to cut interest rates or push Powell to resign before his term ends in May.
In his statement, Powell warned that the administration’s actions risk undermining the independence of monetary policy.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” he said.
According to Adam Turnquist, Chief Technical Analyst at LPL Financial, the grand jury subpoenas issued to the Fed may ultimately have the opposite effect of what the Trump administration intends.
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“The irony is that the subpoenas could actually backfire against the administration’s plan for a dovish overhaul of the Fed. Chair Powell has stressed the importance of an independent Fed, and if he feels it is under threat, he may opt to serve out his Fed governor term until 2028,” he told BeInCrypto.
As concerns about Fed independence renew, markets have already begun to price in the implications.
Markets React To Fed Credibility Concerns
Following Powell’s statement, the dollar weakened against a basket of major currencies as investors reassessed confidence in US monetary policy.
At the same time, demand for safe-haven assets increased, pushing gold prices up to record highs. Equity markets reacted later, with S&P 500 futures falling.
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Meanwhile, long-term US Treasury yields also moved higher, signaling concerns about the Federal Reserve’s ability to contain inflation.
“The threat of Fed independence is weighing on risk appetite and pushing yields higher. Technically, 10Y Treasury yields are consolidating uncomfortably close to key resistance around 4.20%. A breakout above that level would introduce upside risk in yields toward 4.50%,” Turnquist noted.
Together, the moves reflect growing investor unease about the reliability of US monetary policy. The Federal Reserve’s independence has long anchored that reliability and underpins global confidence in the dollar and US assets.
For the crypto market, the implications are less immediate but potentially significant.
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Bitcoin as a Hedge or Risk Asset Question Resurfaces
Following developments over the past few days, Bitcoin’s price has remained relatively stable, trading within the $90,000 to $93,000 range.
Even so, repeated reports of perceived political interference by the Trump administration in the Fed’s monetary policy have renewed debate over Bitcoin’s role in the global financial system.
Historically, Bitcoin has been described as digital gold. Its fixed supply and non-sovereign design position it as a potential hedge against institutional and policy risk. If fears over the health of the US dollar continue to increase, so might the appetite for the digital asset.
That said, Bitcoin has often traded in line with broader risk assets during periods of heightened uncertainty.
As markets assess political pressure on the Federal Reserve, its response may hinge on whether investors view it as a hedge or a high-volatility asset.
