- Powell vows to hold firm as Trump launches new attack on Fed.
- Bitcoin’s price briefly jumped 2% before returning to just above $90,000.
Bitcoin’s price jumped 2% on Sunday after Federal Reserve Chair Jerome Powell vowed to hold firm against a new attack from US President Donald Trump.
In Trump’s latest salvo, the Justice Department served the Fed with grand jury subpoenas and is threatening a criminal indictment. That means the DOJ is legally forcing the Fed to hand over evidence relating to Powell’s testimony on office renovations to the Senate Banking Committee in June 2025 to decide if a crime was committed.
“This unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure,” Powell said.
The move by the White House is a serious escalation in the long-running feud between Trump and Powell. No American president has ever launched a similar attack against a sitting Fed chair.
The central bank has traditionally been free of pressure from the Oval Office, and operates on a mandate of ensuring stable prices and maximum employment.
Trump has aggressively insisted on more and deeper rate cuts to support the US economy. Powell has taken a more cautious approach. Yet, Trump’s aggressive rhetoric towards the Fed has spooked some investors who fear the central bank’s independence is under threat.
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,” Powell said. “Those are pretexts.”
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” he said.
In December, the US central bank slashed interest rates to their lowest level in three years.
“When chair Powell addresses the public directly on a Sunday afternoon, it is either a financial crisis or something equally important,” Peter Tillmann, economics professor at Justus-Liebig University Giessen, said on LinkedIn.
Crypto impact
Riskier assets like Bitcoin or tech stocks are highly dependent on Fed policy. Lower interest rates tend to push up the prices of these assets by disincentivising investors to hold bonds.
But despite the strong tailwinds that have pushed stocks and gold to new record highs, crypto has lagged behind. The overall crypto market is down $1 trillion from its all-time high set in October.
The CME FedWatch tool shows that the Fed is likely to hold interest rates at their current level during the next Open Market Committee meeting on January 28.
Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email atlance@dlnews.com.
