SKN | Bitcoin Stumbles as a Safe Haven After Justice Department Subpoenas Powell

Bitcoin failed to behave as a traditional safe-haven asset after reports that the U.S. Justice Department issued subpoenas related to Federal Reserve Chair Jerome Powell, triggering volatility across global markets. Instead of absorbing risk-off flows, crypto prices weakened alongside equities, underscoring the asset class’s continued sensitivity to macro and regulatory shocks.

The episode highlights an ongoing debate among institutional investors over whether Bitcoin functions as digital gold or remains a high-beta risk asset tied to broader financial conditions.

Market Reaction: Crypto Trades Like Risk, Not Refuge

Following the news, Bitcoin prices fell roughly 2%–3% intraday, slipping below key short-term technical levels, while Ether declined by a similar magnitude. Total crypto market capitalization shed tens of billions of dollars, mirroring declines in U.S. equity futures and rising volatility in Treasury markets.

Trading data showed elevated activity in derivatives markets, with futures open interest contracting as traders reduced exposure. This pattern suggests that, in moments of legal or political uncertainty, Bitcoin is still treated by many participants as a risk asset rather than a defensive allocation.

Macro and Regulatory Implications: Policy Uncertainty Weighs on Narratives

The Justice Department’s involvement around the Federal Reserve adds a layer of institutional uncertainty at a time when monetary policy credibility is central to asset pricing. Historically, Bitcoin proponents have argued that distrust in central banks should support decentralized assets. However, the latest move indicates that markets remain more focused on liquidity conditions and regulatory clarity than ideological narratives.

For crypto investors, this reinforces the reality that U.S. regulatory and legal developments continue to exert outsized influence on digital asset pricing, particularly when they intersect with monetary policy and systemic risk.

Investor Sentiment: Haven Thesis Still Unproven

Behaviorally, the selloff suggests that investors continue to de-risk crypto exposure during stress events, rather than rotate into it. On-chain data showed a modest increase in exchange inflows, often interpreted as a signal of near-term selling pressure, while stablecoin balances rose as traders moved into cash equivalents.

This response contrasts with traditional havens such as gold, which held relatively firm, and highlights a persistent gap between Bitcoin’s long-term narrative and short-term market behavior.

Looking ahead, whether Bitcoin can pass the safe-haven test will likely depend on how it performs during future episodes of systemic stress, particularly if accompanied by easing monetary conditions or declining confidence in fiat institutions. For now, the latest reaction suggests that crypto remains a macro-sensitive asset class, requiring careful positioning rather than blind reliance on the haven thesis.