Bitcoin’s non-sovereign narrative is moving back into focus as political tensions surrounding the US Federal Reserve intensify. Reports of a criminal investigation into Jerome Powell are raising fresh concerns about central bank independence — a dynamic that analysts say could ultimately favor Bitcoin.
Political Pressure Puts the Fed in the Spotlight
Federal prosecutors have reportedly opened a criminal investigation into Powell related to testimony he gave before a Senate committee concerning renovations to Federal Reserve buildings. In a public statement on Sunday, Powell described the probe as a consequence of the Fed setting interest rates based on economic assessment rather than political demands.
The situation unfolds amid ongoing criticism from President Donald Trump, who has repeatedly attacked Powell and the Federal Reserve for resisting calls to cut interest rates. For markets, this has revived fears of political interference in monetary policy.
Why Bitcoin’s Non-Sovereign Narrative Matters
Analysts at crypto exchange Bitunix believe the investigation could introduce short-term pressure for traditional risk assets, particularly US equities. However, they argue that any broader equity correction could strengthen Bitcoin’s appeal as a non-sovereign asset.
“When confidence in dollar credibility and central bank independence is questioned, decentralized assets tend to receive narrative-driven risk premia,” Bitunix analysts said. Over the longer term, they added, persistent political pressure on monetary policy could further reinforce Bitcoin’s role as a hedge against centralized financial systems.
At the time of writing, Bitcoin has gained 0.85% over the past 24 hours, showing relative resilience compared with broader market uncertainty.
Privacy Coins Surge as Risk Narratives Shift
The renewed focus on monetary sovereignty has also benefited privacy-focused cryptocurrencies. Monero surged by 18%, while Zcash climbed 6.5% over the same period, highlighting increased demand for censorship-resistant assets.
“This environment is literally what Bitcoin was created for,” said popular Bitcoin analyst Will Clemente in a post on X. He pointed to rising geopolitical risk, record-high stock valuations, and growing diversification away from sovereign reserves as reinforcing factors for Bitcoin’s long-term thesis.
Investor Sentiment Improves, But Smart Money Hesitates
Despite the macro uncertainty, crypto market sentiment is showing early signs of stabilization. Data from Matrixport indicates that its Greed & Fear Index is forming a base — a pattern that has historically coincided with local Bitcoin market bottoms.
However, professional traders tracked as “smart money” remain cautious. According to Nansen, smart money traders are currently net short Bitcoin by $127 million, suggesting expectations of further short-term downside.
At the same time, these traders are positioning for strength elsewhere. Smart money is net long Ether by $674 million and XRP by $72 million, signaling more optimistic outlooks for select altcoins.
Big Picture: Bitcoin and Political Risk
While near-term volatility remains likely, analysts agree that structural challenges to central bank independence could strengthen Bitcoin’s investment narrative over time. As political risk rises and trust in traditional monetary systems is tested, Bitcoin’s non-sovereign, decentralized design may continue to attract long-term investor interest — even amid short-term market hesitation.
