Bitcoin Strength in Question as DOJ Fed Probe Looms

Main Receptors:

Institutional investors selling bitcoin are seen through the Bitcoin ETF, recording net outflows of $1.38 billion over four trading sessions.

BTC futures data shows a neutral 5% base rate, which is well below the 10% level that typically indicates a true bullish breakout.

Bitcoin (BTC) briefly rose above $92,000 after the DOJ investigation into Federal Reserve Chairman Jerome Powell was reported, although traders were cautious about ETF withdrawals. Despite the unusual results, Bitcoin traders are skeptical due to the withdrawal of funds transferred by the exchange and weak demand for BTC positions used for labor.

Despite the recent rally, Bitcoin is still down 23% since October 2025, with gold and silver reaching their 2026 peak. As a result, while Bitcoin rallied another 14% to $105,000, investors may be hesitant to turn bullish, especially as they lose confidence that the United States will provide more economic stimulus in the near future.

Goldman Sachs no longer expects an interest rate cut in March, citing sticky inflation and lackluster labor market data despite a temporary slowdown. US President Donald Trump has openly criticized the Fed for raising interest rates despite inflation remaining above the target of 2% in the second half of 2025. Powell's term as Fed chair expires in April, opening the door for a successor to lean toward looser monetary policy.

Powell is being scrutinized over the federal building renovation project, prompting analysts to question whether central bank independence could be at risk — a situation that could benefit alternative liminal assets like Bitcoin. Powell said the action should be seen in the broader context of the Trump administration's threats.

Despite major corporate purchases, Bitcoin failed to hold $94,000

Although Bitcoin retook $91,000 on Monday, traders showed little interest in turning bullish, according to data from BTC derivatives.

Bitcoin's risk profile appears to have been largely unchanged by the power struggle between the Fed and the Trump administration, with BTC futures' annual premium or basis rate remaining near neutral-to-depression 5%. Bullish sentiments are evident when BTC futures trade at a 10% premium to or relative to the spot market.

After all, Bitcoin spot ETFs recorded a net inflow of $1.38 billion over four consecutive trading days. More worryingly, Bitcoin failed to sustain levels above $94,000 last month, although Strategy ( MSTR US ) added $1.25 billion in BTC. The Michael Saylor-led company announced Monday its largest bitcoin purchase since July 2025.

RELATED: Bitcoin Will Reach $2.9 Million By 2050

While Bitcoin can serve as an alternative hedge against the traditional financial system, there is little evidence that a crisis of confidence is brewing in the US dollar. In the year Despite a $601 billion fiscal deficit in the last three months of 2025, U.S. government debt remains at investment grade. Meanwhile, the yield on the 5-year Treasury note has remained below 3.8 percent over the past two months.

If traders were bullish for an imminent recession, the US dollar could weaken against a basket of foreign currencies as measured by the DXY index. Instead, the US Dollar Strength Index rose to 99 from a low of 96.7 at the end of November 2025. As a result, despite a strong rally in precious metals, there is currently no clear evidence of a bearish trade.

Ultimately, the appeal of Bitcoin and cryptocurrencies is reflected in ETF flows and demand for improved BTC positions remains muted.

This article is not intended for general information purposes and should not be construed as legal, tax, investment, financial or other advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph. While we strive to provide accurate and up-to-date information, Cointelegraph does not guarantee the accuracy, completeness or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph shall not be liable for any loss or damage arising from reliance on this information.