The Federal Reserve’s hawkish tone zapped investors’ appetite for risky assets like Bitcoin, which saw its price tank by 5% to $70,000 following the US central bank’s Wednesday meeting.
And analysts say that traders shouldn’t expect the price to bounce back as long uncertainties remain over the economy caused by the escalating conflict in the Middle East.
“Looking ahead, Bitcoin is likely to trade in a more selective environment rather than a broad risk-on rally,” Illia Otychenko, lead analyst at crypto exchange CEX.IO, told DL News.
The bearish outlook comes as the Fed decided not to cut interest rates at its March meeting. Lower interest rates usually incentivise investors to bet on riskier assets.
While it was expected that the central bank wouldn’t slash rates this month, the calamity of the US-Israeli offensive against Iran is now obliterating expectations of further cuts this year. The CME FedWatch tool shows that about 96% expects rates to hold and that 4% of investors now expect a rate hike in April. That’s down from a 61% chance of a cut on December 31.
Investors now see little chance of easing this year, or at most one move in the second half, as rising energy prices linked to the Iran conflict and a higher Fed inflation outlook reinforce a “higher for longer” stance, Otychenko said.
“The macro backdrop is becoming more complex — it’s no longer just about slowing growth, but also about inflation potentially staying sticky amid rising uncertainty,” Otychenko said.
Sharp sell-off
Otychenko’s warning comes as broader markets saw a sharp sell-off on Wednesday after Fed Chair Jerome Powell signaled geopolitical uncertainty clouding the central bank’s plans for 2026.
Global markets weakened, with the Dow falling 1.6%, closing below its 200-day moving average, while the S&P 500 and Nasdaq declined over 1.4%. Europe’s Stoxx 600 fell 1.8% and major Asian indices fell between 2% and 3.4%.
Gold also sank over 4% and is trading at $4,685, down 12% from its January peak of nearly $5,400 per ounce.
On Thursday, Brent crude, the global benchmark for oil price, climbed to $115 a barrel after Israeli strikes triggered Iranian retaliation targeting energy infrastructure across the Middle East, including Qatar’s key liquified natural gas hub at Ras Laffan.
More war
The bearish Bitcoin outlook comes as President Donald Trump warned Iran on Truth Social that the US will “massively blow up the entirety of the South Pars Gas Field at an amount of strength and power that Iran has never seen or witnessed before” if Tehran attacks Qatar.
Adding to the chaos, Saudi Arabia is also threatening retaliation. Foreign Minister Prince Faisal bin Farhan said Riyadh reserves the right to act against Iran if required, following talks with Arab and Islamic counterparts on Tehran’s regional attacks.
As the war enters its third week, the Pentagon is weighing the deployment of thousands of additional US troops to the Middle East, people familiar with the discussions told Reuters.
The reinforcements could help the US secure oil tanker transit through the Strait of Hormuz, primarily via air and naval assets. Some scenarios under review extend to limited ground deployments, including positioning forces along Iran’s coastline.
Officials have also examined the possibility of sending troops to Kharg Island, which handles about 90% of Iran’s oil exports, as well as securing stockpiles of highly enriched uranium. Both missions are seen as operationally complex and high risk, given Iran’s missile and drone capabilities.
No decision has been taken and a ground deployment is not considered imminent, officials said, though Trump continues to keep “all options” open.
The deliberations come as US forces intensify strikes on Iran’s naval, missile and defence infrastructure. Since February 28, Washington has carried out more than 7,800 strikes and damaged or destroyed over 120 vessels, according to US Central Command.
American casualties are also mounting. Thirteen US troops have been killed and about 200 wounded, while any move to deploy ground forces would carry significant political costs for Trump, who has long campaigned against new Middle East wars.
