Powell Under Investigation, Waller's Nomination Stalls: Federal Reserve Personnel Turmoil Impacts Bitcoin Market

U.S. Treasury Secretary Scott Bessent calls on the Senate Banking Committee to expedite the confirmation hearings for Kevin Warsh as the next Federal Reserve Chair, despite ongoing investigations by the Department of Justice into current Chair Jerome Powell. This statement has drawn dual attention from Washington and financial markets.

Bessent responded to Senator Tom Tillis’s obstructionist stance during an interview with Fox News. Tillis previously stated that if the investigation is not concluded, all nominations for Fed Chair would be put on hold. Bessent emphasized that the hearings themselves help clarify the controversy and should not be delayed long-term by political deadlock.

The investigation was initiated by federal prosecutor Jeanine Pirro on January 9, focusing on the $2.5 billion renovation project of the Federal Reserve headquarters and surrounding buildings. The investigation centers on whether Powell engaged in misleading conduct during congressional hearings. Powell has publicly denied any misconduct, stating that the investigation is a result of political pressure after he refused Donald Trump’s request for a quick rate cut.

Warsh was nominated by Trump on January 30 and is currently awaiting review by the Senate Banking Committee. If the committee approves, his nomination will be submitted to a full Senate vote, which will ultimately decide whether he will succeed Powell as Fed Chair.

On the market front, this personnel turmoil quickly reflected in the digital asset sector. Warsh is viewed as a hawkish policy maker, and after his nomination was announced, Bitcoin’s price, which had been running at high levels for several weeks, experienced a significant pullback, with the overall cryptocurrency market cap shrinking in tandem. In the following days, tens of billions of dollars in leveraged long positions were forcibly liquidated, prices broke through multiple key support levels, and volatility surged.

Analysts point out that the uncertainty in Fed leadership is increasing macro risk premiums. The outcome of future hearings and the progress of investigations are likely to continue influencing the short-term trends of risk assets and the crypto market.