DOJ’s Move Against the Fed Shook Markets: What It Could Mean for Bitcoin

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.

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.

Video message from Federal Reserve Chair Jerome H. Powell: https://t.co/5dfrkByGyX pic.twitter.com/O4ecNaYaGH

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.

“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.

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.

Gold hits highest closing price in history