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Bitcoin faced renewed scrutiny after Federal Reserve chair Jerome Powell revealed a criminal investigation linked to the central bank.
Powell said the Department of Justice had opened a probe into renovation work at the Federal Reserve.
He described the investigation as politically motivated amid escalating tensions with President Donald Trump.
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.
Jerome Powell said.
Powell said the dispute had little to do with construction costs and more to do with interest rate policy.
Trump, who appointed Powell in 2017, has repeatedly criticised the Fed for not cutting rates quickly enough.
The president denied knowledge of the investigation when asked by NBC News.
I don’t know anything about it.
Donald Trump said.
He’s certainly not very good at the Fed, and he’s not good at building buildings.
Donald Trump said.
Financial markets showed limited immediate reaction to the news.
Bitcoin rose around 1% following the disclosure.
Analysts said the situation could become more volatile if political pressure on the Fed intensifies.
If things take a stronger turn for the worse, there could be a moment in which most assets get sold off.
Luke Nolan said.
Nolan said the episode offers a fresh test of Bitcoin’s status as a non-sovereign asset.
Historical examples of political interference in central banks were cited as cautionary precedents.
Analysts pointed to US inflation in the 1970s after political pressure on the Fed.
Turkey’s currency crisis following central bank interference was also highlighted.
Should Bitcoin outperform through this narrative, it will certainly bolster the case that bitcoin can act as a flight to safety.
Luke Nolan said.
At the time of reporting, Bitcoin price was $91,928.82.