Recent news about Federal Reserve Chair Powell being under criminal investigation has been flooding the headlines, but many people actually don’t quite understand the full story, its background, and what impact it might have on rate cuts and the crypto market. I’ve organized the context and also share my judgment on the subsequent market trend.

**Background of the Event**

On January 9, 2026, the U.S. Department of Justice launched a criminal investigation into Federal Reserve Chair Powell. Powell responded that this was political pressure. Honestly, this issue had already shown signs back in November 2025, but the focus of the investigation suddenly intensified this time, sparking waves of market and capital fluctuations.

What is the focus? — During Powell’s testimony to Congress in June 2025, there were potential issues with his statements regarding the $2.5 billion Federal Reserve headquarters renovation project. This renovation started in 2022, planned to be completed in 2027, but has now overspent by $700 million. That’s the root of the trouble.

**Timeline Overview**

- September 2025: Prosecutor Jeanine Pirro approves the investigation
- January 9, 2026: Department of Justice issues a grand jury subpoena to the Fed
- January 11, 2026: Powell releases a video statement, saying the investigation is political pressure
- January 12, 2026: Trump speaks out, claiming he is unaware but criticizing Powell’s performance

During this period, the market reaction was quite intense.

**Market Sentiment**

Bitcoin surged in the short term, briefly reaching $92,500. Clearly, this was driven by the event. The underlying logic of the market is simple and crude — everyone hopes Powell steps down sooner, and a new chairman more willing to cut rates takes over.

But honestly, I hold a cautious attitude towards this judgment. This rally is more noise from retail investors and community sentiment, not a fundamental change.

Looking at what institutions are doing — last week, Bitcoin spot ETF net outflows reached $681 million. They are fleeing with real money, and this event doesn’t make them change their stance. What does this indicate? It shows that institutional judgment on the crypto market’s future hasn’t become optimistic because of this political storm.

**The True Reflection of Rate Cut Expectations**

Even with Powell being summoned, the market’s expectation of rate cuts hasn’t experienced significant fluctuations.

There are 16 days until the next FOMC meeting. Since the last meeting, the consensus on the magnitude of rate cuts has remained between 350 and 375 basis points. Moreover, the latest expectations are increasing, with a 95% probability reflecting the market’s overall view on rate cuts.

What does this mean? The investigation into Powell doesn’t change the overall market’s view on the pace of rate cuts. The market remains the market; politics is politics. The two lines still haven’t truly intertwined.

**Final Thoughts**

In summary: the short-term rally in crypto prices is a reaction driven by sentiment, but institutional funds are flowing out, and expectations for rate cuts haven’t changed substantially. All these point to one conclusion — the recent rebound might just be a fleeting moment. The real factor influencing the crypto market’s direction is the Federal Reserve’s actual policy stance, not personnel changes at the leadership level.

This is the full picture I see.