Traders on Polymarket and Kalshi are largely dismissing the likelihood that a criminal investigation into Federal Reserve Chair Jerome Powell will lead to his early removal.
Prediction markets signal skepticism that political pressure in Washington will force Powell from his post, even after federal prosecutors launched a criminal probe into the Fed’s $2.5 billion headquarters renovation. On Polymarket, early trading priced just an 8% chance that Powell would step down as Fed chair by March 31—a probability that barely budged despite Powell’s claims that the investigation is being used as a pretext to influence monetary policy.
A separate Polymarket contract shows a 67% probability that Powell will leave the Fed Board by late May, indicating that even after stepping down as chair, his influence on the Board is expected to persist. Regulated U.S. prediction market Kalshi tells a similar story: contracts on whether Powell exits as chair before May 2026 spiked to roughly 19%—a notable daily jump, but still signaling that removal is seen as unlikely rather than the base case.
Broader markets appear to share that cautious outlook. Cryptocurrency prices remained largely steady, with bitcoin hovering near $91,400 and ether holding above $3,100, according to CoinDesk data, suggesting traders are not repositioning for immediate shifts in U.S. monetary policy.
Safe-haven assets moved more decisively. Gold climbed above $4,580 an ounce, while silver rose more than 4.5%. The metals rally could reflect either their inherently higher volatility compared with crypto, or a divergence from prediction markets as investors anticipate continued loose monetary policy under a potential new Fed chair.
When the next Fed chair is selected, prediction market traders are favoring Kevin Warsh, who holds a 43% chance according to a Polymarket contract. In op-eds for the Wall Street Journal, Warsh has argued that inflation stemmed from excessive government spending and an overextended central bank—not wars or tariffs—calling for a smaller, less politicized Fed, a sharply reduced balance sheet, and a renewed focus on price stability as the measure of central bank independence.
Market snapshots:
- BTC: Bitcoin traded near $91,400, signaling that crypto markets are largely ignoring the political drama at the Fed.
- ETH: Ethereum held around $3,125 after retreating from its 100-day moving average, with momentum indicators remaining constructive, suggesting ETH could resume a short-term recovery alongside bitcoin and XRP if key support levels hold.
- Gold: Gold rose over 1% to roughly $4,573 an ounce, extending its rally after mixed U.S. jobs data reinforced expectations for Fed rate cuts amid slowing growth, persistent inflation, and a weaker dollar.
- Nikkei 225: Japan’s Nikkei 225 was closed for a public holiday, leaving local investors on the sidelines while broader Asia-Pacific markets tracked Wall Street’s record gains.
