DOJ Probe of Powell Tests Bitcoin's Safe-Haven Thesis as
Gold Hits Record\n\nKey Notes\n- Powell defends Fed independence amid DOJ investigation.\n- Gold hits record $4,600 per ounce, outpacing Bitcoin's 1.5% gain.\n- Bitcoin ETFs see $431M in withdrawals despite political news.\n\nThe 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.\n\nThe probe has sparked debate over whether Bitcoin can serve as a hedge against political interference in monetary policy.\n\nPowell said the investigation stems from the Fed setting interest rates based on the public interest rather than presidential preferences, according to the Federal Reserve.\n\nHe called the building inquiry a pretext for broader pressure on the institution.\n\nSenator Thom Tillis, a Republican on the Senate Banking Committee, questioned whether the Justice Department's independence and credibility are now at risk.\n\nEven a Republican critic of Fed policy is pushing back. Tillis announced opposition to any Fed nominations until the matter resolves.\n\nGold 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.\n\nCrypto 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.\n\nThis 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.\n\nETF Data Challenges Hedge Narrative\n\nDespite 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.\n\nThis followed a record $4.57 billion pulled out during November and December 2025, according to SoSoValue data.\n\nThe withdrawal trend predates the Powell investigation, which only became public on Jan. 11. Despite earlier predictions of institutional demand shocks driving prices higher.\n\nETF flow data for Jan. 13 will provide the first clear signal of how institutions are responding to the Fed independence crisis.\n\nGold 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.\n\nCrypto-Friendly Fed Chair Candidate Leads Odds\n\nThe investigation has intensified attention on Powell's potential successor. Kevin Hassett leads Polymarket betting odds at 43% with $8.8 million in trading volume, followed by Kevin Warsh at 41%.\n\nHassett owns between $1 million and $5 million in Coinbase stock and previously served on the exchange's advisory council.\n\nJames 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.\n\nPowell'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.
