Bitcoin Rallies Past $94,000 Amid Fed Investigation as Traders Remain Cautious on Market Strength

Price Breakthrough Follows Political Turbulence

Bitcoin's price climbed past the $94,000 threshold this week, marking a decisive break above a key resistance level after weeks of consolidation between roughly $84,000 and $94,000 ^[4]. At the time of reporting, the cryptocurrency traded at $94,435, representing approximately 3% gains over the previous 24 hours ^[4].

The rally coincided with a significant political development as U.S. federal prosecutors launched a criminal investigation into Federal Reserve Chair Jerome Powell ^[1][4]. Powell disclosed that the Department of Justice served the Federal Reserve with grand jury subpoenas related to his June 2025 congressional testimony concerning more than $2.5 billion in Fed office building renovations ^[4].

The Fed chair characterized the investigation as politically motivated, suggesting it reflects mounting pressure from the Trump administration to implement deeper interest rate cuts rather than maintain the central bank's data-dependent framework ^[4]. Powell's term as Fed chair ends in April, potentially opening the door for a successor more inclined toward looser monetary policy ^[1].

Institutional Skepticism Despite Price Gains

Despite the upward price movement, multiple indicators suggest institutional investors remain hesitant. Bitcoin spot exchange-traded funds recorded $1.38 billion in net outflows across four consecutive trading sessions ^[1]. This selling pressure persisted even as Strategy, the company led by Michael Saylor, announced its largest Bitcoin purchase since July 2025, adding $1.25 billion worth of the cryptocurrency on Monday ^[1].

Derivatives markets paint an equally cautious picture. The Bitcoin futures annualized premium, or basis rate, remained near a neutral-to-bearish 5% ^[1]. Periods of genuine bullish sentiment typically feature BTC futures trading at a 10% premium or more relative to spot markets ^[1].

Divergence From Traditional Safe Havens

Bitcoin's performance stands in stark contrast to precious metals, which have reached record highs. The cryptocurrency remains down 23% since October 2025, while gold and silver achieved all-time highs in 2026 ^[1]. This divergence has prompted traders to question whether the digital store-of-value narrative is losing momentum ^[1].

Interestingly, Bitcoin's 52-week correlation with gold reached zero for the first time since mid-2022 and may turn negative by the end of January ^[2]. Historically, when Bitcoin's correlation with gold turned negative in four comparable instances, the cryptocurrency rallied by an average of 56% within roughly two months ^[2]. A rally of that magnitude could push Bitcoin into the $144,000-$150,000 price range ^[2].

Matt Hougan, global head of research at Bitwise Asset Management, noted that "historically, Bitcoin bull markets have aligned with periods of increased global liquidity" ^[2]. He added that as a new monetary easing cycle has begun globally and with the Fed's quantitative tightening program ending, growth rates will likely continue upward throughout 2026, providing a positive catalyst for Bitcoin's price ^[2].

Structural Changes Challenge Traditional Cycles

The broader cryptocurrency market faces structural headwinds that may limit near-term gains. According to crypto market maker Wintermute, 2025 provided evidence that the traditional four-year cycle is becoming obsolete ^[3]. Market breadth narrowed significantly, with altcoin rallies averaging roughly 20 days, down from around 60 days the previous year ^[3].

For conditions to improve in 2026, Wintermute identified three potential catalysts: ETFs and digital asset treasury companies expanding their mandates beyond Bitcoin and Ether; major assets posting strong performance capable of generating a broader wealth effect; or retail investor attention returning to the crypto market ^[3].

Goldman Sachs no longer expects an interest rate cut in March, citing sticky inflation and resilient labor market data ^[1]. Markets are currently pricing in roughly two rate cuts throughout 2026, according to the CME Group's FedWatch Tool ^[3].

Trading volume over the past 24 hours totaled approximately $52 billion, reflecting heightened market participation as price pushed higher ^[4]. Bitcoin's total market capitalization rose to $1.88 trillion, also up about 3% on the day ^[4].