Bitcoin and Ethereum trade higher as equity and dollar markets weaken
WASHINGTON | January 12, 2026 —
Bitcoin and major digital assets traded higher on Monday as global financial markets reacted to news that the U.S. Department of Justice has opened a criminal inquiry into Federal Reserve Chair Jerome Powell. The development added fresh uncertainty to an already fragile macro environment, driving weakness in U.S. equities and the dollar while boosting demand for alternative assets, including cryptocurrencies.
The Department of Justice issued subpoenas related to a criminal investigation into Federal Reserve Chair Jerome Powell over his testimony on a multi-billion-dollar Fed building renovation, triggering risk-off trading across global markets and supporting crypto prices.
Powell confirmed late Sunday that federal prosecutors had subpoenaed the Federal Reserve and were examining statements he made to Congress in June 2025 regarding a roughly $2.5 billion headquarters renovation project. The move marked an extraordinary escalation in legal scrutiny of a sitting central bank chair and was quickly reflected across financial markets.
U.S. stock index futures fell in early Monday trading, while the dollar weakened against major currencies. Gold futures moved higher, reflecting investor demand for defensive positioning. At the same time, Bitcoin and Ethereum posted gains, with traders citing hedging flows and portfolio rebalancing amid political and institutional uncertainty.
Bitcoin traded near $92,000 in European morning hours, up about 1.4% on the day. Ethereum rose roughly 1.8% to around $3,150. Spot trading volumes in both assets were higher than the 24-hour average, while U.S. equity futures remained lower.
Traders in New York said the move into digital assets coincided with a pullback in equities and currency markets. “It’s a classic risk-off response,” one market participant said. “When confidence in institutions comes under pressure, capital looks for assets that are less tied to government balance sheets.”
In London and Frankfurt, institutional desks reported modest increases in Bitcoin and Ethereum exposure through futures and over-the-counter desks. However, several traders cautioned that the flows were tactical rather than structural, with gold and short-dated government bonds still absorbing the bulk of defensive demand.
Funds and proprietary trading desks reduced equity exposure and added limited positions in Bitcoin and Ethereum as part of broader hedging strategies tied to political and legal uncertainty surrounding the Federal Reserve.
Asian markets reflected similar dynamics. Traders in Singapore and Hong Kong reported higher activity in BTC spot and perpetual futures as investors sought diversification away from U.S. assets. Some short positions were forced to cover as Bitcoin pushed above key technical levels.
Open interest in Bitcoin derivatives increased modestly during the session, while funding rates remained near neutral, suggesting balanced positioning between long and short traders. Ethereum derivatives showed a similar pattern, according to exchange data reviewed by this publication.
Altcoins were mixed, with some large-cap tokens outperforming while others lagged behind Bitcoin and Ethereum. Market participants said the lack of broad-based risk appetite limited speculative activity outside the largest cryptocurrencies.
Policy analysts in Europe noted that legal pressure on a sitting Fed chair is rare and could have longer-term implications for central bank independence. For now, however, markets appeared focused on the immediate impact on risk sentiment and liquidity conditions.
As trading continues across U.S., European, and Asian sessions, investors are monitoring both legal developments in Washington and upcoming U.S. economic data for further signals on market direction.
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