Gold Rallies While Bitcoin Falters as Fed Pressure Shakes Dollar – Analyst Expects Further Bear

Gold and silver surged during the Asian market open, while Bitcoin struggled to maintain momentum amid escalating tensions between the Federal Reserve (Fed) and the Trump administration, triggering a flight to traditional safe havens.

The divergence intensified after the Department of Justice’s actions against Fed Chair Jerome Powell sparked concerns about central bank independence, with gold climbing 1.72% and silver soaring over 4.5% in 24 hours, while Bitcoin retreated sharply from $92,000 to $90,000.

The crisis unfolded after the DOJ issued a subpoena to the Federal Reserve and threatened criminal charges against Powell on Friday, which the Fed Chair characterized as retaliation for refusing to align monetary policy with President Trump’s preferred interest-rate trajectory.

Markets are now pricing political rates instead of data-driven policy, fundamentally altering the risk landscape for both traditional and digital assets.

Political Interference Triggers Capital Rotation Into Hard Assets

The DOJ investigation represents an unprecedented threat to the Federal Reserve’s independence, which has remained intact for 113 years, according to QCP Asia analysts.

They warned that any erosion of confidence in central bank autonomy poses a material risk to institutional credibility.

Powell explicitly stated that the probe stems directly from his refusal to cut rates when Trump demanded, marking what analysts describe as an open war that has proven exceptionally damaging for risk assets.

“History suggests that such narratives are sufficient to prompt capital rotation into alternative stores of value,” QCP Asia noted in their January 12 market analysis.

Both gold and silver responded as the market’s default hedges against political and institutional instability, with their overnight surge extending already constructive momentum.

Bitcoin Fails to Capitalize on Fiat-System Risk Narrative

Bitcoin initially participated in the safe-haven rally but failed to sustain a close above $92,000, retracing sharply toward $90,000 at the European open, a pattern that mimicked much of Q4 2024.

The inability to capitalize on bullish narratives shows a structural breakdown Bitcoin has faced since October 10, as optimism around a Q1 breakout has rapidly faded among institutional traders.

QCP analysts observed significant reductions in long-dated call exposure last week, including unwinding of BTC-30JAN26-98k-C and BTC-27FEB26-100k-C positions.

Portions of BTC-30JAN26-100k-C were rolled into BTC-27MAR26-125k-C, suggesting traders are pushing out bullish expectations rather than maintaining conviction in a near-term rally.

US-hours selling pressure, while less concentrated than prior weeks, remains persistent as uncertainty around supply overhangs continues to cap upside potential.

Retail Fear Intensifies as Smart Money Bets on Further Decline

Brazilian research firm Investe Mais identified recurring retail capitulation behavior through the SOPR Short Term Holder chart, revealing short-term investors have been selling at a loss over the past 70 days despite Bitcoin’s structural uptrend.

Retail sentiment approached Extreme Fear at year-end, with the indicator reaching approximately 0.98, matching levels from November 2022 when Bitcoin traded around $16,000.

While Bitcoin reached higher highs throughout 2024-2025 in a clear uptrend, short-term realizations started declining since breaking the old all-time high, with periodic sales at a loss during high-fear episodes.

Smart money traders tracked by Nansen remained net short on Bitcoin for a cumulative $127 million, adding $1.6 million worth of shorts in the past 24 hours alone.

The relative appeal of crypto looks increasingly challenged when set against precious metals’ resilience and equities at all-time highs, compared to Bitcoin’s 30% regression from its 2025 peak.

Near-term volatility risks remain elevated ahead of critical macro catalysts, with markets expected to be sensitive to US CPI data on Tuesday and the Supreme Court’s tariff ruling on Wednesday, both of which could further influence cross-asset positioning.

“Volatility is coming. A crash is coming. And it won’t be accidental,” Nobler concluded, as traders brace for continued turbulence across risk assets.

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