By Omkar Godbole (All times ET unless indicated otherwise)
Since its introduction in 2009, bitcoin (BTC) fans have seen it as an anti-establishment asset and a shield against financial mismanagement and political turmoil.
Yet on Monday, the largest cryptocurrency is trailing traditional safety assets such as gold even as tensions between President Donald Trump and Fed Chair Jerome Powell escalate, raising concerns on the central bank’s ability to maintain its independence.
On Sunday, Powell revealed that federal prosecutors opened a criminal investigation against him, focusing on his Congressional testimony about the central bank’s $2.5 billion renovation. Powell framed the probe as political pressure on the bank’s independence for refusing to cut interest rates aggressively, as the president has repeatedly demanded.
Gold rallied to a record of over $4,600 per ounce, and silver hit an all-time high of $84.60. BTC started Monday on a positive note, rising to $92,000 during the Asian hours, bucking the weakness in Nasdaq futures and hinting at haven demand.
The rare divergence between crypto and equities was short-lived. Bitcoin fell back to $90,500 during the European hours and the broader crypto market also retreated. Privacy-focused monero pulled back from the record high of $598 to $571, still up 15% over 24 hours. CC, RENDER, and ZEC are other standout coins, gaining 4%-5% over the past 24 hours.
BTC’s pullback comes as Treasury yields maintain Friday gains, a sign the markets do not expect Powell to cave under legal pressure and cut rates aggressively. At the time of writing, the 10-year U.S. yield was poised to top the 4.2% mark, with the rate-sensitive two-year yield at 3.54%, the highest in two weeks.
Analysts at ING said that the dip in the U.S. jobless rate in December reported by the Bureau of Labor Statistics on Friday and a likely hotter-than-expected inflation data this week could keep the Fed from cutting rates at least until March.
Other observers cited ETF flows as a headwind.
“From January 5 to January 9, spot Bitcoin ETFs recorded net outflows of $681 million despite elevated trading volumes of $19.5 billion, signalling active repositioning rather than disengagement. Ethereum ETFs also posted $69 million in weekly outflows,” Timothy Misir, head of research, BRN, said in an email.
“In contrast, XRP and SOL ETFs continued to attract capital, reinforcing a theme of selective rather than broad-based risk appetite,” Misir added.
Derivatives, however, pointed to a lackluster market in the near term, with 30-day BTC and ETH implied volatility indices hovered at the lowest levels for weeks. Stay alert!