Bitcoin shot up 4.5% on Jan. 29, climbing to around $105,000 after the Federal Reserve decided to hold interest rates steady. Traders snapped back to riskier assets after five straight days of losses.
The surge puts Bitcoin just $4,000 shy of its all-time high, which it hit last week on ‘crypto president’ Donald Trump’s first day in office. The sudden price hike came as markets tried to shake off the chaos caused by a Chinese AI startup, DeepSeek, which had sent stocks and crypto spiraling.
Bitcoin has been moving more in step with stock markets in recent weeks. The correlation tightened after inflation worries pushed both Wall Street and crypto into a risk-off mood earlier this month.
Stephane Ouellette, CEO of FRNT Financial Inc., said Bitcoin’s bounce wasn’t just about the Fed’s announcement. “Rather than a direct response to today’s Fed announcement, we view the move as more related to recovering from the nonsensical sell-off earlier in the week and putting the Fed announcement behind us,” he explained. For traders, the Fed’s pause gave markets the breather they needed.
Powell’s crypto remarks turn heads
At the press conference that happened after the Federal Open Market Committee meeting today, Powell made a pro-crypto comment, or at least the closest thing to it.
“Banks are perfectly able to serve crypto customers as long as they can understand and service the risks,” Powell said, which is a huge change in attitude from the Biden era’s hardline approach.
Under Biden, crypto businesses struggled to maintain relationships with banks, often being dropped for reasons shrouded in secrecy. Now, Powell is telling banks that they don’t need to shut out crypto, as long as their operations are “safe and sound.”
The comment is also a huge departure from the debanking drama of recent years, where major institutions cut off access to financial services for crypto companies. Powell addressed the issue head-on, saying:
“We certainly don’t want to take actions that would cause banks to terminate customers who are perfectly legal just because of excess risk aversion.”
Senate hearing to investigate debanking
On February 5, the U.S. Senate Banking Committee will hold a hearing to investigate debanking practices targeting the crypto industry. Republicans on the committee have confirmed three witnesses: Nathan McCauley, CEO of Anchorage Digital; Evan Hafer, founder of Black Rifle Coffee; and Stephen Gannon, a partner at DWT Law.
Their testimonies are expected to pull back the curtain on specifically how and why banks were severing ties with crypto businesses.
Hafer, known for running a conservative-owned business, has also faced account closures. The committee’s investigation seeks to determine if banks are selectively cutting off clients for political or regulatory reasons.
And the banks have gone into full-on damage control mode. Bank of America told Fox Business, “We never close accounts for political reasons. We are required to follow strict government rules and regulations, which sometimes lead to decisions to exit certain relationships.” JPMorgan took a similar line, saying, “We follow the law. Full stop. Political bias has no place in our policies.”
Still, those reassurances aren’t sitting well with crypto insiders. Many have long accused Wall Street of playing favorites, cutting off access to crypto businesses to protect their dominance. Jamie Dimon, JPMorgan’s CEO, weighed in on the issue during his company’s podcast, The Unshakeables. He admitted that banks are often forced to shut accounts but can’t legally disclose the reasons to their clients, saying:
“We should be allowed to tell clients why. There should be far clearer rules about what we have to do and what we don’t have to do.”
Last week, Donald Trump blasted Bank of America CEO Brian Moynihan in a speech at the World Economic Forum. The president accused Bank of America and JPMorgan of locking out conservative businesses.
“They don’t take conservative business,” Trump said. “I don’t know if the regulators forced that because of Biden or what, but you and Jamie and everybody—I hope you open your banks to conservatives because what you’re doing is wrong.”
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