Recently, news about Federal Reserve Chair Powell being under criminal investigation has been dominating headlines. However, many people are not quite clear on the details of this incident, its background, and what impact it might have on interest rate cuts and the crypto market. I’ve organized the timeline and also share my judgment on the subsequent market trend.

**Background of the Incident**

On January 9, 2026, the U.S. Department of Justice launched a criminal investigation into Federal Reserve Chair Jerome Powell. Powell responded that this was political pressure. To be honest, there were signs of this as early as November 2025, but the attention on this investigation suddenly increased, sparking waves in the market and capital flows.

What is the focus? — During Powell’s testimony to Congress in June 2025, there were questions about the $2.5 billion Federal Reserve headquarters renovation project. His statements might have been problematic. This renovation started in 2022, with a planned completion in 2027, but it is now over budget 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 Federal Reserve
- January 11, 2026: Powell releases a video statement, claiming the investigation is political pressure
- January 12, 2026: Trump speaks out, saying 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 incident. The underlying logic is simple and crude — everyone hopes Powell will step down sooner and a new chair more willing to cut rates will take over.

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

Looking at institutional behavior — last week, Bitcoin spot ETF net outflows reached $681 million. They are really pulling out real money, and this incident doesn’t make them change their stance. What does this mean? It indicates that institutions’ outlook on the crypto market has not become optimistic because of this political storm.

**The Reality of Rate Cut Expectations**

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

There are 16 days until the next FOMC meeting. Since the last meeting, the market 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 imply? Powell’s investigation does not change the overall market view on the pace of rate cuts. The market remains the market; politics and leadership changes are still separate lines and have not truly intertwined.

**Final Thoughts**

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

That’s the full picture I see.