Summary
- It reported analysis suggesting that if political uncertainty rises due to the probe involving Chair Powell, Bitcoin (BTC) could again draw attention for its asset characteristics.
- The market said it could weigh on risk assets overall in the short term, but noted that Bitcoin could be revisited as an asset relatively free from government control.
- While the Fear & Greed Index suggests bottoming, smart money is betting on a short-term decline in Bitcoin, leaving interpretations mixed over the possibility of Bitcoin being re-rated as an alternative asset.
As news breaks of a probe involving Jerome Powell, chair of the U.S. Federal Reserve (Fed), analysts say Bitcoin (BTC) could regain attention for its asset characteristics if political uncertainty intensifies.
According to cryptocurrency-focused media outlet CoinDesk on the 12th, U.S. federal prosecutors have opened a criminal investigation into Powell over testimony he gave at a Senate hearing regarding a renovation of the Fed’s buildings. Powell said his stance is that the matter was "the result of conducting monetary policy based on standards judged to serve the public interest, not the president’s preference." President Donald Trump has publicly criticized Powell and the Fed amid demands for interest-rate cuts.
Markets say it could weigh on risk assets broadly in the near term. However, if controversy grows over political interference in monetary policy, Bitcoin could also be revisited as an asset relatively free from government control.
Analysts at crypto exchange BitUnix said that "when questions are raised about confidence in the dollar and central-bank independence, decentralized assets can receive a narrative-driven risk premium," adding that "if political intervention becomes structurally embedded in monetary policy, Bitcoin’s role could be strengthened."
Meanwhile, investor-sentiment gauges point to gradual improvement. Matrixport said the moving average of the Fear & Greed Index is forming a bottom. By contrast, Nansen data show that traders classified as so-called "smart money" are maintaining positions betting on a short-term decline in Bitcoin, leaving interpretations mixed.
The outlet reported that "the market is watching whether, if political and institutional uncertainty increases further in the wake of the Powell probe, Bitcoin can break away from moving in tandem with risk assets and be re-rated as an alternative asset."
