Bitcoin Drops Below $71K as Fed Warns of Oil-Driven Inflation Risks

Bitcoin slipped under $71,000 on Wednesday after Federal Reserve Chair Jerome Powell signaled that surging oil prices tied to the ongoing war in Iran could keep inflation elevated longer than expected. The Federal Open Market Committee held interest rates steady, as markets had widely anticipated, but Powell's remarks during his post-meeting press conference rattled investors already on edge.

Powell confirmed that the energy price spike is already factoring into the Fed's updated projections, stating that the oil shock "for sure shows up" in higher inflation forecasts, though he noted that its long-term persistence remains uncertain. The central bank revised its 2026 inflation outlook upward to 2.7%, compared to its earlier estimate of 2.4%, signaling that price pressures may linger well into next year.

Despite the cautious tone, Powell pushed back against stagflation comparisons, arguing that current conditions do not mirror the economic turmoil of the 1970s. With unemployment still near historical norms and inflation only modestly above the Fed's 2% target, he described the situation as a manageable tension between the central bank's dual goals of price stability and maximum employment rather than a full-blown crisis.

Financial markets reacted negatively across the board. Bitcoin fell nearly 5% over 24 hours, bottoming out near $70,900, while Ethereum dropped 6.5%. The S&P 500 and Nasdaq each closed near session lows, declining roughly 1.4% and 1.5%, respectively. Gold continued to weaken, falling more than 3% to below $4,850 per ounce, its lowest point in over a month.

Crypto-linked equities also took a hit. Strategy, the largest corporate Bitcoin holder, and Ethereum-focused Bitmine both fell between 5% and 6%. Galaxy declined nearly 7%, and crypto exchange Gemini plunged 15%, touching its lowest level since its public debut last year.