Emre Yumlu 
The criminal investigation opened into US Federal Reserve (Fed) Chair Jerome Powell has introduced a new layer of political uncertainty into global financial markets. While the immediate implications are being felt across traditional assets, analysts suggest that Bitcoin could ultimately benefit from renewed attention to its non-sovereign nature, potentially leading to the emergence of an additional risk premium.
The Powell Investigation and the Debate on Fed Independence
The investigation stems from testimony Powell delivered to a Senate committee regarding renovation projects at Federal Reserve buildings. Federal prosecutors are examining the accuracy of those statements, a development that has amplified concerns about political influence over monetary authorities.
Powell has publicly framed the probe as a consequence of the Fed prioritizing its economic mandate over political preferences, emphasizing that interest rate decisions are made based on public welfare rather than executive pressure. This comes against the backdrop of repeated criticism from President Donald Trump, who has openly challenged Powell and urged the Fed to cut interest rates more aggressively.
https://twitter.com/federalreserve/status/2010510130970849338
Such tensions have reignited debate around central bank independence, a cornerstone of market confidence. In the short term, this environment introduces political headwinds for risk assets, particularly US equities, which are more directly exposed to institutional instability.
Bitcoin’s Non-Sovereign Narrative Gains Momentum
According to analysts at crypto exchange Bitunix, moments when confidence in fiat credibility and central bank autonomy weakens tend to favor decentralized assets. Bitcoin, by design, operates outside sovereign control, making it increasingly attractive during periods of political friction within monetary systems.
The analysts argue that a broader correction in equity markets could further highlight Bitcoin’s role as an alternative risk asset. Over the longer term, if political interference in monetary policy becomes a structural issue rather than a temporary episode, Bitcoin’s positioning as a non-sovereign store of value may strengthen considerably.
Market Reaction and Privacy Coins Outperformance
Market data already shows selective reactions to these dynamics. Bitcoin posted a modest 0.85% gain over the past 24 hours, while privacy-focused cryptocurrencies experienced significantly stronger moves. Monero surged by 18%, and Zcash climbed 6.5% over the same period, signaling heightened demand for censorship-resistant and privacy-preserving assets.
Bitcoin analyst Will Clemente described the current macro backdrop as closely aligned with Bitcoin’s original purpose. Rising geopolitical risks, pressure on central banking institutions, and elevated valuations across traditional risk assets all contribute to reinforcing Bitcoin’s long-term narrative.
Investor Sentiment Improves, Smart Money Remains Cautious
Data from Matrixport suggests that crypto investor sentiment is gradually recovering. The moving average of its Fear & Greed Index is forming a base, a pattern historically associated with Bitcoin bottoming phases.
However, positioning data from Nansen indicates continued short-term caution among experienced traders. “Smart money” remains net short Bitcoin by $127 million, while simultaneously holding net long positions in Ether and XRP. This divergence reflects a selective risk appetite rather than broad-based bullish conviction across the crypto market.
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