Powell probe puts Bitcoin to test

January 12, 2026

 

Reading time: 5 minutes

Bitcoin falters as Powell probe tests haven narrative

Key points:

  • Bitcoin failed to hold above $92,000 after an initial spike tied to political uncertainty surrounding the Federal Reserve and its chair.

  • Strategy pressed ahead with a $1.25 billion Bitcoin purchase, reinforcing long-term conviction even as macro signals remained mixed.

News - Bitcoin’s long-held reputation as a hedge against political and monetary turmoil faced a fresh test this week as markets reacted to reports of a criminal investigation involving Jerome Powell.

According to Powell, federal prosecutors opened the probe over his congressional testimony related to the Federal Reserve’s $2.5 billion headquarters renovation project. 

He described the action as politically motivated pressure following the central bank’s refusal to cut interest rates more aggressively, warning that such moves could undermine the Fed’s ability to operate independently.

The news briefly lifted BTC above $92,000 during Asian trading, diverging from falling equity futures and a weaker dollar as investors reassessed risks tied to central bank independence. That rally proved short-lived. As European trading began, Bitcoin slid back toward the $90,000 level, mirroring a broader pullback across crypto markets. 

Treasury yields remained elevated, signaling that traders were not positioning for near-term rate cuts despite the political noise. Gold and silver, by contrast, pushed to fresh highs, highlighting Bitcoin’s continued struggle to behave consistently as a traditional safe-haven asset.

Altcoins diverge as risk appetite turns selective - While Bitcoin retraced its gains, several altcoins showed relative strength. Privacy-focused tokens led the move, with Monero reaching fresh highs and Zcash extending its rebound. 

Elsewhere, derivatives data pointed to subdued volatility expectations and declining open interest across major tokens, suggesting caution rather than aggressive risk-taking as leveraged positions were unwound.

Fund flow data reinforced that defensive tone. Crypto investment products recorded $454 million in weekly outflows, with Bitcoin products accounting for the majority of withdrawals. 

The United States was the only region to post sizable net outflows, while select altcoin funds continued to attract modest inflows, reflecting targeted positioning instead of broad-based enthusiasm.

Strategy accumulates through the noise - Against this backdrop, Strategy disclosed its largest Bitcoin purchase since July, adding 13,627 BTC for roughly $1.25 billion. The acquisition, funded through ongoing equity issuance programs, lifted its total holdings to 687,410 BTC despite sizable unrealized losses reported late last year. 

The move highlighted how long-term corporate conviction continues to contrast with the market’s near-term unease.

Regulators stress-test Ethereum as ETH outlook turns cautious

Key points:

  • European policymakers modeled an extreme Ether collapse to assess how market shocks could spill into settlement and financial infrastructure risks.

  • Ether’s medium-term outlook has softened, even as long-term adoption ambitions and design debates continue to shape Ethereum’s future.

News - European regulators are sharpening their focus on Ethereum’s role beyond speculation, treating it increasingly as critical financial infrastructure. 

In a recent research paper, the Bank of Italy modeled an extreme scenario in which Ether’s price fell to zero, examining how such a shock could undermine validator incentives, weaken network security, and disrupt settlement for stablecoins and tokenized assets built on Ethereum.

The study framed Ether not just as a volatile asset, but as a core economic input for onchain financial services. If ETH rewards lost value, a portion of validators could rationally exit, reducing total stake, slowing block production, and weakening Ethereum’s ability to guarantee timely transaction finality. 

Regulators warned that such stress could spill beyond trading into payment and settlement use cases that authorities increasingly monitor.

Standard Chartered trims expectations - That caution is reflected in updated market outlooks. Standard Chartered lowered its medium-term Ether price forecasts, citing broader weakness across digital asset markets. The bank reduced its end-2026 ETH target while maintaining a more optimistic long-term view into the next decade.

Market data echoed that restraint. Ether has rebounded in recent sessions, but price action remains fragile within a broader bearish structure. 

Analysts noted that holding above the $2,880 level is critical to avoid activating a deeper pullback, while resistance remains concentrated around the $3,090 to $3,110 zone. Onchain indicators showed mixed positioning, with large holders accumulating ETH while top-performing traders reduced spot exposure.

Ethereum’s long-term design debate - Beyond near-term pricing, Ethereum’s leadership remains focused on resilience. 

Vitalik Buterin has argued that the network must be robust enough to function as trustless infrastructure over decades, even without frequent protocol changes. He has also warned that stablecoin design, oracle security, and validator economics remain critical vulnerabilities if Ethereum is to support financial activity at scale.

Together, the signals point to an ecosystem under growing scrutiny, where long-term ambition is increasingly weighed against structural and market stress tests.

Monero breaks records as privacy trade heats up, risks build

Key points:

  • Monero surged to fresh all-time highs as renewed interest in privacy-focused assets drove sharp price gains.

  • Despite strong momentum and bullish long-term comparisons, crowded positioning and thin liquidity raise the risk of near-term volatility.

News - Monero’s rally gathered pace this week, with the privacy-focused token surging more than 35% over seven days and briefly touching highs near $598. The move marked a major breakout, decisively lifting it above prior cycle peaks and setting it apart from a broader crypto market that struggled to find direction.

The rally has been fueled by a renewed focus on privacy, anticipation around protocol upgrades, and capital rotation into higher-beta corners of the market. 

Veteran trader Peter Brandt added to the optimism by comparing Monero’s long-term price structure to silver’s historic breakout, arguing that prolonged periods of sideways price action can precede explosive upside when narratives and positioning align. 

His comparison focused on market behavior rather than specific price targets, reinforcing the idea that Monero may still be early in a longer cycle.

Momentum stays strong, but fragility emerges - Beneath the surface, however, signs of strain are beginning to appear. 

Social sentiment around Monero has surged sharply since late December, climbing more than 400% and approaching levels last seen ahead of prior corrections. Spot flows show buyers remain active, with exchange outflows accelerating even as price pushed higher.

Derivatives data paints a more cautious picture. Long positioning has become increasingly crowded, with potential long liquidations outweighing shorts by a wide margin. Analysts noted that a loss of support near the $554 level could accelerate downside moves through forced unwinds, even without a broader trend reversal.

Liquidity and structure add caution - Market structure also complicates the picture. Much of Monero’s trading activity remains concentrated on offshore venues, limiting depth and amplifying price swings. While privacy tokens have outperformed as Bitcoin remains rangebound, thin liquidity means sharp reversals can emerge quickly once momentum cools.

For now, Monero’s strength reflects a powerful privacy-driven rotation. Whether it evolves into a sustained breakout or a volatile shakeout may depend less on narrative and more on how positioning and liquidity adjust from here.

Crypto community pushes back as X visibility concerns grow

Key points:

  • Crypto users report declining visibility on X, sparking accusations of algorithmic suppression and conflict-of-interest concerns.

  • X’s rollout of Smart Cashtags comes amid broader evidence that crypto engagement is falling across multiple social platforms.

News - Frustration is mounting across the crypto community as users report a noticeable decline in crypto-related content appearing on X, the platform long known as Crypto Twitter’s primary hub. 

The backlash intensified after comments from Nikita Bier, X’s Head of Product, were interpreted by many as confirmation that aggressive posting behavior can limit an account’s reach.

In a now-deleted post, Bier pushed back against what he described as a misconception that frequent replies help accounts grow. He argued that repeatedly posting low-value replies can exhaust an account’s daily distribution, reducing the visibility of later, more substantive posts. 

His remarks triggered sharp criticism from crypto users, some of whom accused X of deliberately weakening community-driven discussion. Others questioned Bier’s advisory role with Solana, raising concerns about potential conflicts of interest as X expands its crypto-related features.

Engagement slump extends beyond X - Not everyone agrees that algorithm changes are solely to blame. Analysts and creators have pointed to a broader decline in crypto engagement across social platforms. 

Data shared by Into The Cryptoverse’s Founder and CEO Benjamin Cowen showed crypto YouTube viewership falling to its lowest level since early 2021, reinforcing the idea that retail interest has cooled across the sector.

Several creators attributed the drop to fatigue from scams, pump-and-dump cycles, and uneven market returns, while others argued that institutional participation has increasingly dominated the current market cycle. The pattern suggests shrinking social interest alongside ongoing debate over platform-level visibility changes.

Smart Cashtags add context, not clarity - The debate unfolded just as Bier said X is building Smart Cashtags, a feature designed to link crypto and stock tickers to live price data, charts, and related discussions. 

He noted that the tool is intended to reduce confusion around asset symbols and improve financial conversations on the platform, with user feedback being collected ahead of a potential public release next month.

While X has not linked Smart Cashtags to recent visibility complaints, the timing has fueled skepticism. For now, the episode reflects a broader tension between platform mechanics, declining engagement, and a crypto community struggling to maintain visibility in a shifting social media landscape.

Did you know?

  • Crypto adoption isn’t just about price spikes: Even when prices aren’t soaring, people still use crypto in daily life for things like e-commerce purchases and international transactions, with a notable portion of users choosing crypto for real payments rather than speculation.

  • People with higher crypto knowledge are much more likely to own it: Research shows that the likelihood of owning cryptocurrency increases by between 6× and 10× for people who strongly understand crypto concepts compared to those with low understanding, revealing how knowledge gaps drive participation unevenly.

  • Most NFT traders never made a profit: Blockchain analysis has shown that a large majority of NFT traders either broke even or lost money overall, with profits heavily concentrated among a small minority of early or highly active participants, challenging the perception that NFTs were broadly lucrative for most users.

Top 3 coins of the day

Aerodrome Finance (AERO)

Key points:

  • AERO rebounded to around $0.57 after defending the $0.45–$0.48 zone, marking a short-term recovery from December’s sell-off.

  • The price moved back above the Bollinger Bands midline, while CMF climbed toward neutral, signaling easing selling pressure.

What you should know:

AERO posted a steady rebound after forming a base near the lower Bollinger Band in late December. The recovery unfolded gradually, with price reclaiming the 20-day SMA and briefly pushing toward the upper band before momentum cooled. 

Volume expanded during the initial bounce and then normalized, suggesting the move was supported by participation rather than a thin rally.

From an indicator perspective, Bollinger Bands began tightening after weeks of wide expansion, reflecting reduced volatility during consolidation. CMF improved from deeply negative territory and hovered near the zero line, indicating that capital outflows slowed, though sustained inflows were still limited.

Beyond chart dynamics, sentiment likely benefited from expectations around supply reduction measures and a potential merger-driven expansion of the Aerodrome ecosystem, which may have helped stabilize demand. The $0.50–$0.52 zone now acts as immediate support, while $0.62–$0.65 remains the key resistance to watch.

Monero (XMR)

Key points:

  • XMR surged toward the $570 zone after extending its higher high and higher low structure, outperforming the broader market.

  • The Awesome Oscillator expanded deeper into positive territory, while volume picked up during the breakout phase, reinforcing bullish momentum.

What you should know:

Monero advanced sharply after breaking out from a prolonged consolidation, with price accelerating from the mid-$400s and holding firmly near recent highs. The rally unfolded with limited pullbacks, and each pause was followed by renewed buying interest, keeping the broader uptrend intact.

From a structural standpoint, the Higher High Lower Low indicator continued to flag higher highs, while recent retracements formed higher lows rather than trend breakdowns. 

Momentum also strengthened, as reflected by the Awesome Oscillator’s rising green bars, pointing to sustained upside pressure rather than exhaustion. Volume expanded alongside the move, suggesting the breakout was supported by participation rather than short-lived speculation.

Beyond chart signals, sentiment around XMR likely benefited from regulatory clarity in Dubai and capital rotation within the privacy-coin segment, alongside heightened trading activity. The $520–$540 zone now acts as immediate support, while $600–$620 remains the key resistance to monitor.

Solana (SOL)

Key points:

  • SOL edged higher toward the $140 area after rebounding from December lows, though recent candles still reflected cautious follow-through.

  • The Elliott Wave Oscillator remained above zero, while volume stayed steady, signaling improving momentum without aggressive expansion.

What you should know:

Solana staged a gradual recovery after carving out a base near the $118–$120 zone in late December. The advance unfolded with measured gains rather than sharp surges, as price climbed through a series of short-lived pullbacks and rebounds. 

While the broader downtrend eased, recent price action continued to show lower highs, highlighting that the recovery remained fragile rather than trend-defining.

Structurally, the Higher High Lower Low indicator marked a decisive lower low at the December bottom, followed by stabilization and a subsequent rebound. 

However, the latest swing failed to establish a higher high, reinforcing a transition phase instead of a confirmed trend reversal. Momentum improved during this phase, with the EWO holding above the zero line and green histogram bars gradually expanding.

Beyond chart dynamics, SOL likely drew support from selective accumulation and rotation toward high-conviction altcoins. The $130–$132 range now acts as immediate support, while $145–$148 remains the key resistance zone to watch.

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