Key Notes
- Powell defends Fed independence amid DOJ investigation.
- Gold hits record $4,600 per ounce, outpacing Bitcoin’s 1.5% gain.
- Bitcoin ETFs see $431M in withdrawals despite political news.
The Department of Justice served the Federal Reserve with grand jury subpoenas on Jan. 9 over a $2.5 billion headquarters renovation, prompting Chair Jerome Powell to issue a rare video statement defending central bank independence.
The probe has sparked debate over whether Bitcoin
BTC
$90 272
24h volatility:
0.6%
Market cap:
$1.80 T
Vol. 24h:
$36.71 B
can serve as a hedge against political interference in monetary policy.
Powell said the investigation stems from the Fed setting interest rates based on the public interest rather than presidential preferences, according to the Federal Reserve.
He called the building inquiry a pretext for broader pressure on the institution.
Senator Thom Tillis, a Republican on the Senate Banking Committee, questioned whether the Justice Department’s independence and credibility are now at risk.
Even a Republican critic of Fed policy is pushing back. Tillis announced opposition to any Fed nominations until the matter resolves.
Gold responded decisively, climbing 1.78% to $4,588.77 per ounce on Jan. 12. Bitcoin added a smaller gain of 1.5%, reaching around $92,000.
Crypto analyst Will Clemente framed the environment as precisely what Bitcoin was designed for. He pointed to the President targeting the Fed chair as metals surge and geopolitical risk rises.
This environment is literally what Bitcoin was created for. The President is coming after the Fed chair. Metals are ripping as sovereigns diversify reserves. Stocks & risk assets at record highs. Geopolitical risk rising.
If bitcoin can’t catch a bid soon then IDK
— Will (@WClementeIII) January 12, 2026
ETF Data Challenges Hedge Narrative
Despite bullish sentiment, recent institutional flows have been mixed. Bitcoin exchange-traded funds (ETFs) saw approximately $431 million in investor withdrawals during the first week of January 2026.
This followed a record $4.57 billion pulled out during November and December 2025, according to SoSoValue data.
The withdrawal trend predates the Powell investigation, which only became public on Jan. 11. Despite earlier predictions of institutional demand shocks driving prices higher.
ETF flow data for Jan. 13 will provide the first clear signal of how institutions are responding to the Fed independence crisis.
Gold advocate Peter Schiff attributed gold’s outperformance to legitimate concerns about Fed independence. He argued that monetary policy remains too loose regardless of the political conflict.
I am not a fan of Powell, but I agree with him on Trump’s motivation. This is part of the reason gold is soaring to record highs this evening. In truth, Powell and Trump are wrong: monetary policy is too loose, and interest rates are too low. https://t.co/emrcNakmEE
— Peter Schiff (@PeterSchiff) January 12, 2026
Crypto-Friendly Fed Chair Candidate Leads Odds
The investigation has intensified attention on Powell’s potential successor. Kevin Hassett leads Polymarket (a prediction market) betting odds at 43% with $8.8 million in trading volume, followed by Kevin Warsh at 41%.
Hassett owns between $1 million and $5 million in Coinbase stock and previously served on the exchange’s advisory council.
James Butterfill of CoinShares expects Bitcoin to trade between $120,000 and $170,000 in 2026. He noted the next Fed chair is likely to favor lower interest rates, but markets will wait for clarity before adjusting valuations.
Powell’s Chair term expires in May 2026. Top analysts project Bitcoin could reach new highs in the first half of the year, as detailed in the 2026 analyst predictions, though current safe-haven flows favor gold during institutional crises.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
As a Web3 marketing strategist and former CMO of DuckDAO, Zoran Spirkovski translates complex crypto concepts into compelling narratives that drive growth. With a background in crypto journalism, he excels in developing go-to-market strategies for DeFi, L2, and GameFi projects.
