Bitcoin’s price dropped below $71,000 after Federal Reserve Chair Jerome Powell pointed to rising energy costs as an inflation risk, sparking renewed concerns on global markets. The volatility followed reports that the ongoing conflict in Iran has pushed oil prices higher, putting upward pressure on inflation expectations worldwide.
Fed Adjusts Inflation Outlook Upward
Keeping its benchmark interest rate steady as markets had anticipated, the Federal Reserve signaled a more hawkish stance on inflation during Powell’s press briefing. Powell acknowledged that surging energy prices are being factored into inflation forecasts, noting that oil-driven shocks have been added to the central bank’s projections. Yet, he underscored the uncertainty about how long these effects might persist.
The impact of oil-related shocks is apparent in inflation estimates, though the duration of this influence remains unclear, Powell noted.
Fed policymakers revised their inflation forecast for 2026, raising it from 2.4% to 2.7%. This upward adjustment signals that price pressures could linger longer than previously assumed. However, Powell emphasized that the current situation is not comparable to the stagflation crises of the 1970s, distancing the present economy from that tumultuous historical period.
Fed Stays Cautious on Stagflation Fears
Powell pointed out that unemployment remains close to its historical averages and inflation is only slightly above target, suggesting conditions do not reflect a more severe economic scenario. He acknowledged the ongoing tension between growth and inflation targets, stressing that policymakers are striving to strike a delicate balance between them.
The current landscape does not match the stringent definition of stagflation, Powell said, pushing back against comparisons with harsher eras.
These comments, coupled with already disappointing February inflation data and heightened geopolitical tensions, fueled an acceleration of selling across risk assets. The uncertain outlook for energy prices—amplified by recent events in Iran—intensified the sense of caution among market participants.
Markets See Broad-based Declines
Bitcoin dropped as low as $70,900 in intraday trading, representing a nearly 5% decline in the last 24 hours. Ethereum followed a similar trajectory, sliding by about 6.5% over the same period. The declines in digital assets reflected a clear retreat from risk as sentiment shifted in the face of mounting uncertainties.
Traditional equity markets echoed these losses. The S&P 500 index ended the day down 1.4%, while the Nasdaq closed lower by 1.5%. Gold also fell sharply, slipping below $4,850 per ounce at one point for a daily loss of 3.1%, reaching its lowest price in over a month.
Shares of companies linked to cryptocurrencies experienced particularly steep declines. Top institutional Bitcoin holder Strategy and Ethereum-centric firm Bitmine lost between 5% and 6%. Galaxy Digital’s stock dropped approximately 7%, while Gemini’s shares plunged 15%—bringing them close to their lowest levels since going public.
