Powell Stays Firm Amid Federal Investigation, Prediction Markets Signal Stability in Fed Leadership

Political Pressure Unlikely to Force Early Exit Despite Criminal Probe into Fed Headquarters Renovation

In an era of heightened political tensions surrounding the Federal Reserve, prediction markets are showing remarkable confidence that Chair Jerome Powell will withstand the current storm of pressure from Washington. Despite federal prosecutors launching a criminal investigation into the Fed’s $2.5 billion headquarters renovation, market indicators suggest Powell’s position remains relatively secure in the near term. This stability persists even after Powell took the unusual step of publicly suggesting the administration might be using the probe as leverage to influence monetary policy decisions.

Data from Polymarket reveals traders have priced just an 8% probability that Powell will step down by March 31, a figure that remained surprisingly steady despite the escalating rhetoric. This market sentiment reflects a broader belief among investors that the current political maneuvering will not translate into immediate leadership changes at America’s central bank. While a separate Polymarket contract assigns a 67% chance that Powell will leave the Federal Reserve Board by late May, this timeline aligns more closely with natural succession planning rather than forced removal. The markets are essentially signaling that even after Powell’s eventual departure from the chair position at the end of his term, his influence will likely continue to shape Fed policy through his board presence.

Kalshi, a regulated U.S. prediction market, presents complementary data that reinforces this narrative of stability. Contracts pricing the possibility of Powell’s removal before May 2026 have increased to approximately 19% – a significant daily jump but still far from suggesting removal as the most likely scenario. Instead, these figures position an early Powell exit as a low-probability outcome rather than the market’s base case expectation. This measured response from prediction markets offers valuable insight into how informed traders are interpreting the political theater surrounding the Federal Reserve leadership.

Financial Markets Show Restraint as Safe Havens See Movement

The broader financial markets appear to be echoing this restraint in their reactions to the Powell controversy. Cryptocurrency prices remained largely stable amid the political noise, with Bitcoin holding steady near $91,400 and Ethereum maintaining its position above $3,100, according to CoinDesk market data. This price stability suggests crypto traders are not actively repositioning their portfolios in anticipation of imminent shifts in U.S. monetary policy that might result from leadership changes at the Federal Reserve.

Traditional safe-haven assets, however, have shown more decisive movement in response to the uncertainty. Gold climbed above $4,580 per ounce, while silver gained more than 4.5% in recent trading. This divergence between cryptocurrency markets and precious metals could reflect several dynamics: either the historically higher volatility in metals markets compared to the maturing crypto sector, or possibly a genuine split in market outlook, with metals traders preparing for what they anticipate will be another era of loose monetary policy under potential new Fed leadership. The precious metals rally gained additional momentum following mixed U.S. employment data that further reinforced market expectations for upcoming Federal Reserve rate cuts, highlighting the complex macroeconomic backdrop of cooling growth, persistent inflation, and a weakening dollar.

For investors trying to anticipate future Fed leadership, prediction market traders are currently favoring Kevin Warsh as Powell’s most likely successor, assigning him a 43% probability of securing the position according to Polymarket contracts. Warsh’s public positions, outlined in Wall Street Journal opinion pieces, suggest he would pursue a markedly different approach than the current administration, having argued that recent inflation stemmed not from external factors like wars or tariffs, but from excessive government spending and an overextended central bank. His advocacy for a smaller, less politically influenced Federal Reserve, substantial balance sheet reduction, and renewed focus on strict price stability as the benchmark for central bank independence signals potentially significant policy shifts should he eventually assume the chairmanship.

Broader Crypto Landscape Continues Evolution Despite Regulatory Challenges

While the Federal Reserve drama unfolds, the cryptocurrency ecosystem continues its technical and regulatory evolution. Ethereum co-founder Vitalik Buterin recently highlighted that decentralized stablecoins still face three significant unresolved challenges, underscoring the ongoing development hurdles in a crucial segment of the digital asset space. These technical observations come as regulatory bodies maintain their active oversight of crypto markets, with Tennessee authorities ordering Kalshi, Polymarket, and Crypto.com to cease offering sports betting contracts in the state.

The Asian markets presented a mixed picture in response to these developments, with Japan’s Nikkei 225 closed for a public holiday, leaving local investors temporarily sidelined even as other Asia-Pacific markets tracked Wall Street’s recent record-setting performance. For Bitcoin specifically, the price stability near $91,400 represents remarkable resilience during a period of potential monetary policy uncertainty, suggesting crypto market participants may be increasingly focused on asset-specific fundamentals rather than traditional macro drivers. Similarly, Ethereum maintained its position near $3,125 after a brief pullback from its 100-day moving average, with technical indicators suggesting ETH could resume its recovery alongside Bitcoin and XRP if key support levels continue to hold through this period of political and economic uncertainty.

The measured response across financial markets to the Powell investigation highlights an important evolution in how investors process political risks. Rather than reacting with immediate volatility to headlines, market participants appear increasingly sophisticated in distinguishing between political posturing and genuine policy risks. This maturation is particularly notable in cryptocurrency markets, which historically exhibited extreme sensitivity to regulatory and political developments but now display remarkable stability even amid high-profile Federal Reserve controversies. As this situation continues to develop, market participants will be closely monitoring both prediction markets and traditional financial indicators for early signals of any meaningful shift in the outlook for Federal Reserve leadership and consequent monetary policy direction.