Federal Prosecutors Target Federal Reserve: Crypto Markets Brace for Impact
In January 12 2026, Federal prosecutors have launched a criminal inquiry into Federal Reserve Chair Jerome Powell and the central bank, focusing on a controversial $2.5 billion headquarters renovation. This unprecedented move, which Powell claims is political pressure to influence interest rates, sends shockwaves through traditional finance and creates a complex landscape for cryptocurrency.
Historically, challenges to the Fed’s independence trigger market instability. Early indicators show U.S. stock futures falling and the dollar weakening, while gold ($PAXG ) prices surge. This "sell-America" trade narrative is bolstering Bitcoin ($BTC ), which some investors see as a decentralized safe haven against institutional uncertainty. Bitcoin has shown resilience, even gaining as traditional assets falter.
However, the broader crypto market remains cautious. The Crypto Fear & Greed Index signals "Extreme Fear" due to lingering volatility and potential for wider economic fallout if the Fed’s leadership is destabilized. While lower interest rates (a potential outcome of political pressure) generally favor crypto, a full-blown constitutional crisis over the Fed's independence could lead to a systemic "risk-off" event, impacting all assets.
If the Fed's credibility is damaged, banks might accelerate the adoption of private ledgers that connect to the public XRP Ledger (XRPL) to maintain liquidity without relying solely on centralized U.S. systems. $XRP value proposition strengthens if the plumbing of the traditional financial system is perceived as compromised or overly politicized.
The investigation is a critical test for cryptocurrency's role as a true hedge against government and central bank actions, setting the stage for significant market shifts.
