Bitcoin’s Dip Amid Inflation Concerns
Bitcoin dropped below $71,000 on Wednesday following comments from Federal Reserve Chairman Jerome Powell, who highlighted rising oil prices from the ongoing conflict in Iran as a new risk for inflation.
While the Fed decided to keep interest rates steady, Powell noted in a post-meeting press conference that the recent surge in energy prices was already influencing the Fed’s outlook.
He remarked that the rise in inflation expectations was a “clear sign of the oil crisis,” although he admitted that “no one knows” how long the effects might linger.
Policymakers updated their inflation forecast for 2026, increasing it from 2.4% to 2.7%, which indicates a concern that price pressures might persist longer than initially thought.
Despite this, Powell rejected any comparisons to the stagflation of the 1970s, indicating that the central bank is dealing with tensions between slowing growth and high inflation. “That’s not the case at the moment,” he maintained, pointing out that inflation is only slightly above the target, and unemployment rates are near historical norms. “I want to reserve the term stagflation for more serious situations,” he added.
He further explained, “What we have is some tension between the goals and we’re trying to overcome that.”
Cautious Sentiment in the Market
The market was already under pressure before the Fed’s announcement regarding February’s poor inflation data, with the ongoing Iran conflict not helping matters. It fell further as the day ended.
Bitcoin also dropped, sliding to around $70,900 late Wednesday afternoon, which marked almost a 5% decline over the past 24 hours. Meanwhile, Ether (ETH) saw a sharper decline of 6.5%.
The S&P 500 and Nasdaq finished lower for the day, down 1.4% and 1.5%, respectively. Gold prices also continued to drop, falling 3.1% to below $4,850 an ounce, which is the lowest in over a month.
Stocks related to digital assets suffered as a result of the dip in cryptocurrency prices. MicroStrategy (MSTR), a key corporate BTC holder, and Bitmine (BMNR), a major player in Ethereum, each dropped by 5-6%. Investment firm Galaxy (GLXY) saw nearly a 7% decline, while cryptocurrency exchange Gemini (GEMI) plummeted 15%, nearing its lowest point since it became public last year.
