On April 24, the case took an unexpected turn. Washington D.C. Prosecutor Piro, responsible for the renovation case of the Federal Reserve building, announced the termination of the criminal investigation against Federal Reserve Chairman Powell, transferring the case files from the prosecutor's office to the Office of the Inspector General of the Federal Reserve for continued review, while leaving a caveat—if necessary, the investigation will be restarted without hesitation. On the surface, this was a procedural switch from “criminal accountability” to “internal accountability,” but in essence, it pushed a storm that could have pointed at personal criminal responsibility into the cracks of the system.

Almost within the same news cycle, another line was quickly pulled tight. The White House publicly expressed confidence that the Senate would swiftly confirm Kevin Walsh as the next Chairman of the Federal Reserve, a statement viewed as an unusually direct political endorsement; prior to that, Senate Banking Committee member Thom Tillis had explicitly tied his support for Walsh to the “cessation of the investigation into Powell.” Now, with the investigation halted and the case redirected to the Inspector General, the path for Walsh to take over was procedurally cleared, and the real battleground shifted to the upcoming weeks of Senate hearings and voting.

The market sensed these developments faster than any verbal battles. After the termination of the investigation and the White House's statement, the prices of contracts on the prediction market Polymarket regarding “Walsh being confirmed as Federal Reserve Chairman before May 15” rose significantly, as traders began to adjust their expectations of his probability of assuming the chairmanship. Almost simultaneously, the pricing of federal funds rate swaps and related tools from CME also showed subtle shifts: the overall expectation for the Fed to initiate rate cuts within the year warmed up slightly compared to before. Research briefs caution that this series of events should not be simply equated to “paving the way for rate cuts,” but from the perspective of high-beta risk assets like cryptocurrencies, a repricing regarding “new chairman + earlier rate cuts” has quietly begun.

Investigation Slams the Breaks: Powell Exonerated

On the day when the market was busy repricing “new chairman + earlier rate cuts,” the case itself came to an abrupt stop. On April 24, 2026, Prosecutor Piro, who had been under external scrutiny, stepped into the spotlight to announce the cessation of the criminal investigation against Powell concerning the Federal Reserve building renovation project. That statement was written with extreme restraint: the investigation concludes at this stage, and the case will be handed over to the Office of the Inspector General of the Federal Reserve for continued review of the renovation project and related expenditures.

This was not an unexpected disruption. Previously, the budget, contracts, and expenditure processes for the building renovation had been dissected layer by layer, and the scope of the investigation had gradually expanded from whether the costs were reasonable to whether the decision-making process was standard, and whether internal supervision had failed, pulling Powell into the path of the criminal investigation. Now appearing to abruptly stop, it looks like a pause button pressed on personal criminal responsibility risks, rather than a complete archival of the case.

Piro himself clearly did not want the external world to misunderstand this as a “get out of jail free card.” In the summary of his public remarks, he left a stark message: “If necessary, the investigation will be restarted without hesitation.” The Department of Justice has also reserved the right to restart the investigation if necessary. The decision on paper is termination, while the underlying implication of his words is: legal and political risks are temporarily sealed away, rather than eliminated. For Powell, this represents a conditional “exoneration”—stepping away from the courtroom battlefield, yet not completely out of the storm's radius.

More crucially is the route the investigation will take next. With the case files transferred, the Office of the Inspector General of the Federal Reserve has become the new main character. The investigation switched from an external criminal path led by Washington D.C. prosecutors to a compliance review path led by an internal oversight agency: questions such as how the renovation project was initiated, how the budget was approved, and whether the expenditures complied with internal rules will be dissected within the Federal Reserve's own oversight system. Many commentators believe that compared to the spotlight of the criminal investigation, the internal documents and process details held by the Inspector General hold more opportunity to reveal the genuine aspect of this renovation project on the books.

This transformation holds significant meaning in terms of procedure and boundaries of power. On one hand, Powell temporarily shook off the direct threat of “being prosecuted,” with the case shifting from a binary judgment of “was there a crime” to institutional accountability regarding “was there any violation, was there any misconduct;” on the other hand, as long as the Inspector General's investigation conclusions have not yet fully emerged, and the judicial department explicitly retains the space to restart the investigation, the so-called “exoneration” will always carry a shadow. To the outside world, this resembles shifting the contradictions from an open courtroom into the lengthy corridors of the institution—the doors have closed, but the negotiations and reviews inside have not finished.

Walsh’s Ascendance Expectations Heat Up

As the building renovation case was pushed back into the deep corridors of the institution from the prosecutor's office, another door quietly opened at the other end of Washington—one marked with Kevin Walsh's name. Discussions surrounding the next Federal Reserve Chairman had already pointed to him, and now he was no longer just a rumored “popular candidate,” but a formal nomination placed on the Senate's table, awaiting processing by the Banking Committee and the full chamber.

In the same news cycle that announced the termination of the criminal investigation against Powell, the White House sent a more direct signal: expressing confidence that the Senate would “rapidly confirm” Walsh as the next Federal Reserve Chairman (according to single-source reporting). The technical implication of this statement is an optimistic judgment on the prospects of a majority vote in the Senate; politically, it has been broadly interpreted by the market and media as the executive branch's recognition that the key obstacles in front of Walsh were being cleared.

This “obstacle” has a specific name: Thom Tillis. As a member of the Senate Banking Committee, he had previously stated clearly that he would only support Walsh for the Federal Reserve Chairman after halting the investigation into Powell, tying his crucial vote to whether the prosecution would “cease its actions.” This open conditional exchange was perceived at the time as blatant political pressure and essentially laid the groundwork for subsequent negotiations—so long as the investigation existed, the confirmation process for Walsh hung by a thread; once the investigation was put on pause, the thread was automatically released.

Therefore, when Prosecutor Piro announced the cessation of the criminal investigation and the transfer of the case to the Inspector General on April 24, the interpretation in Washington was almost completed in synchrony: the most sensitive political threshold for Walsh had been circumvented. The close timeline between the termination of the investigation and Walsh's nomination and Senate confirmation process was seen as lowering the internal resistance within the Banking Committee and clearing the “procedural justice” concerns in broader chamber voting discussions. Even if the Department of Justice clearly reserved the space to restart the investigation later, this distant and uncertain risk is fundamentally different in its impact on the current confirmation process.

This repricing quickly manifested itself in the betting markets regarding “Walsh’s ascendance timeline.” On the prediction market Polymarket, the prices of contracts surrounding “Walsh being confirmed as Federal Reserve Chairman before May 15” strengthened significantly, indicating that some traders had already placed their bets on the direction of “smooth confirmation and a more dovish path;” should the process suddenly delay or unexpected votes occur, the sentiment in the interest rate and cryptocurrency markets could rapidly reverse.

However, uncertainties at the procedural level have not completely disappeared. The Senate Banking Committee has yet to announce a formal timetable for voting on Walsh's nomination; phrases like “voting may take place later next week” only exist as pending verification messages externally. Nominally, Walsh's nomination procedures are still at the stages of hearings and voting; substantively, after the investigation was put on hold, the White House openly stood in support, and key lawmakers’ conditions were met, he is now just a few procedural hurdles away from the chairmanship. In the coming weeks, when and at what pace these hurdles are crossed will determine whether “Walsh takes over smoothly” or if the process continues to move forward amidst controversy.

Market Rewrites Rate Cut Timelines

As the political drama nears a certain stage, it's time for the interest rate curve to take over the narrative. After the abrupt halt of the investigation, the White House publicly endorsed Walsh, and the prediction market contracts strengthened, this series of signals has led the federal funds rate swap curve to begin adjusting its narrative version—the possibility of initiating rate cuts within the year has been rewritten into the prices.

The swap market does not present a series of clear numbers, but rather a slightly downward-trending yield path: the implied endpoint interest rate is no longer “nailed” at a high level as it was in the past few weeks, and the probability of experiencing the first rate cut within the year has risen compared to earlier. Directionally, traders are starting to allocate room for “at least one rate cut,” but still using cautious positions to indicate to one another: this feels more like a fine-tuning of the path rather than a rewrite of the script.

This correlates with the pricing of tools like CME. Tracking indicators like FedWatch have again made their way into media headlines, and some opinions claim that the scenario of cumulative 25 basis points rate cuts before the end of the year has re-entered mainstream discussions, but even so, there still exists disagreement on specifics of probabilities and ranges, and these numbers remain to be validated. More importantly, what market participants are using these tools to measure is not just the outcome of a single meeting, but the potential deviations of an entire policy trajectory under the new leadership expectations.

The termination of the investigation, the rising expectations for Walsh's confirmation, and the upward adjustment of rate cut probabilities nearly coincided, providing commentators with a ready-made narrative template: some have directly interpreted this on social media as “paving the way for rate cuts.” However, from research and factual perspectives, there is currently no evidence to prove that this is a solidified causal chain. A more prudent statement would be: as Powell's term approaches its end and the probability of Walsh's ascendance is adjusted upward by the market, the interest rate path was already at a juncture needing repricing, the overlap of these three elements on the timeline has been amplified into a story.

Historical experience also reminds investors that leadership changes often coincide with resets in interest rate expectations. New Chairmen have not even truly stepped into the FOMC conference room, yet the market has already taken the lead, rehearsing the monetary policy style of the "Walsh era" within swap and futures contracts—whether it’s an earlier entry into easing or simply a drop from “higher for longer” to “longer and slower,” all these scenarios are translated into basis points and documented at the end of the curve.

For high-beta assets, these seemingly slight curve movements carry weight far greater than a mere personnel announcement. Cryptocurrencies, growth stocks, and long-duration bonds are highly sensitive to marginal changes in interest rate expectations and liquidity environments, and the rising expectations for rate cuts within the year equate to opening a channel of imagination for risk appetite—even if reality hasn't yet produced a definitive impact. In the coming weeks, as Senate hearings and votes proceed, the trajectories of interest rates and leadership will continue to intertwine, also setting up a prelude for the next phase of high-volatility assets.

Political Deals and Independence’s Covert Battle

Another narrative line in Washington stretches from the quotes of interest rate swaps and prediction markets right through the corridors of the Senate Banking Committee. Long before the investigation was still ongoing, Thom Tillis had openly drawn a firm stance: his support for Kevin Walsh becoming Chairman of the Federal Reserve was tied to the cessation of the investigation into Powell. This public statement of linking personnel appointments with criminal procedures was seen by many as a classic signal of political conditional exchange, laying the groundwork for various speculations that followed.

The chronological overlap of these events makes the suspicion all the more glaring. On April 24, 2026, Prosecutor Piro announced the termination of the criminal investigation related to Powell’s building renovation, transferring the case to the Office of the Inspector General of the Federal Reserve while retaining the right to restart the investigation if necessary. Almost simultaneously in the same news cycle, the White House issued a statement expressing confidence that the Senate would quickly confirm Walsh as the next Federal Reserve Chairman, interpreted as a strong signal of political support. The close timing of the investigation’s cessation and the advancement of the nomination, combined with Tillis' previous “packaged” conditions, led markets and media to naturally stitch together a political transaction image—despite the fact that beyond these public statements and timelines, there is no substantial evidence supporting a stronger causal judgment.

Surrounding this puzzle, the public discourse quickly split. Some commentators described the entire process as a textbook case of “using investigation as a political tool,” even referring to it with terms like “Trump's capitulation,” implying that the termination of the investigation had pressures from within the party and the White House. Such statements are fundamentally political commentary and inferences, yet to be confirmed by judicial documents or formal investigations. The Department of Justice retains the right to restart the investigation at any time, formally leaving a door open for the future while also creating an unresolved suspense over whether “political interference really occurred.”

The independence of the Federal Reserve has repeatedly been brought to the forefront in this debate. Supporters of the investigation's transfer arrangement argue that the Office of the Inspector General of the Federal Reserve is the most capable entity of revealing the truth behind the building renovation and related expenditures, asserting that the case retreating from local prosecutors to internal oversight systems is a form of institutional self-consistency: it avoids skewing criminal procedures within a political atmosphere while allowing professional internal audits to address specialist issues. In this narrative, the cessation of the criminal investigation and the shift to an Inspector General inquiry is seen as giving monetary authorities “breathing room,” protecting them from being entangled in short-term political cycles.

Critics, however, provide a completely opposite interpretation. They worry that internal oversight may not be able to completely shake off political influences, especially at a delicate moment when the chair's term is nearing its end and prospects for the next occupant are surfacing. Transitioning the case from prosecutors to the Federal Reserve's internal systems, in their view, appears more like an operation to “incorporate sensitive issues into the system.” They remind that the simultaneous emergence of rising expectations for rate cuts alongside changes in leadership is being narrated as a direct line on some social media—“paving the way for rate cuts”—as if the termination of the investigation, Walsh’s nomination, and changes in interest rates form a coherent political plan. Yet research briefs clearly indicate that this strong causal chain currently exists only in commentary and opinions, with no evidence to equate the investigation's termination with future interest rate paths.

In the fringe of the judicial system, even more extreme voices have emerged. Some comments have pointed fingers at judge Boasberg, calling for his impeachment to express dissatisfaction with the entire handling process. These assertions are currently seen only in scattered comments, with no formal processes following them, resembling more an emotional political stance rather than a reality-driven institutional process.

As a result, what initially appeared to be an investigation centered around building renovation expenditures has morphed at the juncture of termination and transfer into a hidden tug-of-war over “political transactions” and “institutional independence.” Supporters and critics each hold their own narrative: the former emphasizes that the Inspector General's investigation reflects the institution's self-repair ability, while the latter warns political forces may reshape the boundaries of the monetary authority through internal procedures. The true contest will continue to unfold in the upcoming Senate hearings and vote—nominally examining Walsh's personal history and policy positions but essentially also serving as a collective vote on how much independence the Federal Reserve can retain in the new landscape.

Is a New Chairman on the Way? Risks and Opportunities

From “ceasing the criminal investigation” to “rising expectations for Walsh’s confirmation,” and then to “increasing expectations for rate cuts within the year,” the market has collectively rewritten the Federal Reserve's future path in a single news cycle:
Legal risks have temporarily moved off the criminal stage, Walsh is seen as a candidate with greater chances of taking over, while the pricing changes in federal funds rate swaps and CME tools quickly translate this personnel expectation into higher rate cut probabilities. Even if research and official stances avoid admitting “termination of investigation = paving the way for rate cuts” as a direct cause, this invisible chain genuinely exists within trading boards—it alters the way risk premiums are calculated:
Who becomes chairman and how he views inflation and employment starts to matter more than “will Powell be prosecuted or not.”

For macro and cryptocurrency traders, this signifies a new operating environment:
● As long as the market believes that Walsh's tenure may bring a gentler tightening path, the expectations for interest rates and dollar liquidity will lean towards easing, naturally raising risk appetite for high-beta assets;
● However, as long as political and regulatory shadows linger overhead, this optimism is accompanied by the condition of “being retractable at any moment”—should the narrative reverse, retracement would also occur swiftly.

In the upcoming weeks, the key signals and timeline to watch can generally be summarized into three main lines:

● Senate Rhythm and Voting Results
The rhythm of the Senate Banking Committee's hearings and the progress of the nomination from committee to full chamber voting, along with the final voting discrepancies, will directly feed back into the repricing of U.S. Treasury yields and risk asset premiums.
The price of contracts concerning “Walsh confirmed before May 15” on Polymarket significantly rose indicating that some traders have already placed bets on a direction of “smooth confirmation and more dovish paths;” if the process suddenly drags on or unexpected votes occur, interest rates and cryptocurrency market sentiments might rapidly reverse.

● Walsh and Federal Reserve Policy Signals
Once Walsh more clearly expresses his preferences regarding inflation, employment, and interest rate paths in the Senate hearings, the market will recalibrate the “dot plot” and wording for future meetings.
For investors holding high-volatility assets such as Bitcoin and Ethereum, the most crucial focus is not whether a specific meeting will yield an immediate rate cut, but rather:
- How the market adjusts its confidence around the probability of “initiating rate cuts within the year” in response to speeches and data;
- Whether Walsh is interpreted as placing more emphasis on employment and financial conditions, while relatively tolerating slightly higher prices.
This cognitive shift will determine the slope of mid-term market trends more persistently than a single meeting's 25 basis points.

● Whether the Investigation Will “Resurrect” and the Rhythm of the Inspector General’s Investigation
The Department of Justice clearly reserves the right to restart the investigation related to Powell if necessary, as the case has merely shifted from the criminal level to the Office of the Inspector General of the Federal Reserve, and has not been declared “utterly uneventful.” This means that:
- If subsequent details disclosed by the Inspector General generate public or congressional pressure, the Department of Justice has grounds to re-enter the stage;
- Should “re-investigation” become a realistic option, the debate surrounding the Federal Reserve's independence and political interference will amplify once more.
For the market, such legal and political noise typically does not immediately alter interest rate paths but may broaden the tactical volatility range—particularly in emotionally sensitive markets like cryptocurrencies.

In other words, this recent episode of “investigation termination—Walsh odds rising—rate cut expectations warming” is merely the beginning of a new chapter, not the conclusion.
Macro and cryptocurrency investors need to synthesize these three clues—Senate timetable, Walsh's policy preferences, and subsequent actions from the Department of Justice and the Inspector General—into a unified trading coordinate system: while expectations gradually tilt towards easing, ample positions and rhythmic space should be preserved to account for emotional reversals that could be interrupted by political and regulatory events at any moment.

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