Why A DOJ Probe On The Fed Could Boost Bitcoin

The U.S. Federal Reserve just entered uncharted territory, and cryptocurrency markets are paying close attention.

Federal Reserve Chair Jerome Powell released a rare video statement on January 12, confirming that the Department of Justice (DOJ) has served the Fed with grand jury subpoenas tied to a potential criminal indictment.

The probe relates to Powell’s June 2025 testimony before the Senate Banking Committee regarding the Fed’s controversial $2.5 billion headquarters renovation project that has drawn criticism over massive cost overruns.

But Powell made one thing very clear: this is not really about the building.

Powell: “Those Are Pretexts”

In his statement, Powell said he respects the rule of law and accountability, stressing that no one, including himself, is above the law. However, he framed the DOJ action as political retaliation rather than a legitimate legal inquiry.

“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.”

According to Powell, the real issue is the Fed’s refusal to bend to political pressure on interest rates. He argued that the Fed sets rates based on economic data, it follows its dual mandate of price stability and maximum employment, and doesn’t answer to political demands for easy money.

“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead, monetary policy will be directed by political pressure or intimidation.”

Powell said the investigation represents a direct challenge to central bank independence, a foundation of U.S. economic credibility. He also noted he has served under four administrations from both parties and vowed to continue his duties with integrity despite the threat of indictment.

The statement comes amid escalating tensions with President Donald Trump, who has repeatedly pushed for aggressive rate cuts and criticized both Powell and the Fed’s renovation spending.

How Markets Reacted Overnight

The video landed just ahead of the global market open, and traders immediately went risk-off. Early January 12 reactions included U.S. stock futures (Nasdaq and S&P) dipping, the U.S. dollar slightly weakening, gold and silver surging, and Bitcoin (BTC) rising modestly toward the $92,000 range before returning to $90,000.

While equities wobbled, Bitcoin showed resilience and even strength, as investors leaned into the ‘hedge against fiat instability’ narrative.

Bull Case: Why This Could Be Bullish For Bitcoin

Crypto thrives when confidence in fiat systems weakens. If the DOJ probe escalates and political pressure forces the Fed toward faster rate cuts, liquidity could surge into risk assets, which has historically been a major tailwind for Bitcoin.

Lower rates tend to push investors toward scarce assets, reduce the appeal of low-yield fiat, and increase speculative and institutional risk appetite. At the same time, any erosion of Fed credibility strengthens Bitcoin’s appeal as non-political money, reinforcing its ‘digital gold’ role.

In past easing cycles, Bitcoin has consistently benefited.

Bear Case: Why Volatility Is Almost Guaranteed

On the other side, this situation introduces serious uncertainty. With Fed leadership under legal threat, Powell’s term ending in May 2026, and a new chair potentially shifting policy direction dramatically, institutions possibly pausing exchange-traded fund (ETF) inflows, markets could enter a ‘wait-and-see’ mode.

If the probe drags on or expands, it could spook investors and trigger broader risk-off moves, pulling crypto lower in the short term.

The Bottom Line

A DOJ probe into the Federal Reserve is something markets have never had to price before. It threatens the independence of the world’s most powerful central bank, introduces political risk directly into monetary policy, and arrives just as global liquidity conditions hang in the balance.

Bitcoin’s early resilience suggests investors are already treating it as a hedge against. But one thing is certain: volatility is to be expected. The Fed is under pressure, politics is colliding with monetary policy, and crypto is now part of the story.