Trump Denies DOJ Powell Probe Involvement as Crypto Markets Eye Fed Policy

VADODARA, January 12, 2026 — U.S. President Donald Trump has publicly denied involvement in the Department of Justice's investigation of Federal Reserve Chair Jerome Powell, according to a report from Walter Bloomberg. This latest crypto news creates immediate uncertainty for digital asset markets that have developed tight correlations with Federal Reserve monetary policy decisions since the 2024 election cycle. Market structure suggests the political pressure on central bank independence represents a systemic risk factor for Bitcoin's valuation model.

Market Context & Background

Cryptocurrency markets have developed an increasingly sophisticated correlation matrix with traditional monetary policy instruments since the 2022-2023 rate hike cycle. According to Federal Reserve historical data, Bitcoin's 60-day correlation coefficient with real interest rate expectations reached 0.78 in Q4 2025, the highest level since institutional adoption began in 2020. This relationship stems from Bitcoin's evolving narrative as a hedge against monetary debasement and central bank policy errors. Consequently, any political interference in Federal Reserve operations creates immediate repricing signals across crypto volatility surfaces. Underlying this trend is the market's recognition that Powell's leadership has maintained relative policy consistency through multiple economic cycles, providing a stable reference point for crypto valuation models.

Related regulatory developments include Coinbase's opposition to the CLARITY Act's stablecoin provisions and recent token unlocks creating supply pressure, both reflecting broader regulatory uncertainty affecting market structure.

What Happened?

According to the primary source report from Walter Bloomberg, President Trump explicitly stated he is "not involved" with the DOJ's subpoena of Federal Reserve Chair Jerome Powell. This statement follows an earlier New York Times report indicating federal prosecutors had opened an investigation into Powell, though specific allegations remain undisclosed. The timing coincides with heightened market sensitivity to Federal Reserve communications, with the FOMC meeting scheduled for January 28-29, 2026. Market analysts note that the political dimension introduces unprecedented variables into the traditional central bank transparency framework that crypto markets have learned to price efficiently.

Technical Analysis & Price Action

Bitcoin's immediate price reaction to the news was contained within a $900 range, trading between $91,720 and $90,820 in the subsequent four hours. Volume profile analysis indicates accumulation at the $91,200 level, suggesting institutional buyers are treating this as a potential liquidity grab opportunity. The 4-hour chart shows a developing Fair Value Gap (FVG) between $92,100 and $92,800 that represents immediate resistance. Market structure suggests Bitcoin must reclaim this FVG to maintain bullish momentum toward the $95,000 psychological level.

The critical technical development is Bitcoin's interaction with the Fibonacci 0.618 retracement level at $89,500, drawn from the November 2025 low of $82,400 to the December high of $98,700. This level coincides with the 50-day exponential moving average, creating a confluence support zone. A sustained break below $89,500 would represent a bearish invalidation of the current market structure, potentially triggering a gamma squeeze in options markets where significant put open interest accumulates at the $88,000 strike. Conversely, the bullish invalidation level sits at $87,200, where the weekly order block from October 2025 begins.

By The Numbers

Why It Matters

For institutional portfolios, this development matters because it threatens the stability of Bitcoin's monetary policy correlation framework. Since the approval of spot Bitcoin ETFs in January 2024, institutional allocation models have increasingly incorporated Federal Reserve policy expectations as a primary input variable. According to SEC filings from major asset managers, approximately 42% of institutional Bitcoin holdings are explicitly positioned as "monetary policy hedge" allocations. Any degradation in central bank independence or predictability reduces the effectiveness of this allocation thesis, potentially triggering systematic rebalancing.

For retail traders, the immediate impact manifests through increased volatility and potential liquidation cascades. The derivatives market shows elevated put-call ratios at the $90,000 strike, indicating retail positioning for downside protection. Market structure suggests retail traders should monitor Bitcoin's interaction with the $89,500 support level as a key determinant of short-term directionality.

Community Sentiment

Market analysts on X/Twitter reflect divided interpretations. Some bulls argue that political pressure on the Federal Reserve accelerates the case for Bitcoin as an apolitical monetary system, with one quantitative researcher noting, "Central bank politicization is precisely why Satoshi created Bitcoin." Bearish voices highlight the short-term correlation risk, with a derivatives trader stating, "If Powell's position becomes unstable, we lose the cleanest macro signal we've had for crypto in years." The consensus among institutional commentators suggests monitoring Bitcoin's break from traditional correlations as either a structural bullish development or temporary dislocation.

Price Prediction / Future Outlook

Bullish Case: If Bitcoin maintains above the $89,500 support and political uncertainty resolves without Federal Reserve policy disruption, the market could interpret this as validation of crypto's independence from traditional systems. This scenario would likely see Bitcoin reclaim the $92,800 FVG and target the $95,000 resistance level. Institutional inflows might accelerate as the "political risk premium" gets priced out, with on-chain data indicating accumulation patterns from large holders above $90,000.

Bearish Case: If the DOJ investigation escalates or creates Federal Reserve policy uncertainty, Bitcoin's correlation framework breaks down negatively. A sustained break below $89,500 would trigger technical selling toward the $87,200 weekly order block. In this scenario, the Crypto Fear & Greed Index could dip below 20, indicating extreme fear and potential capitulation. Market structure suggests the $85,000 level represents the next major support, where significant liquidity pools accumulated during the November 2025 consolidation.