Bitcoin's price has fallen below $71,000, primarily influenced by hawkish remarks from Powell and the Iranian oil shock, leading to a forced liquidation wave of $542 million in the crypto market.
The direct cause of this decline was the Federal Open Market Committee (FOMC) decision on Wednesday, followed by a press conference. The Federal Reserve kept the benchmark interest rate unchanged at 3.5%-3.75% as expected, with the FOMC voting 11 to 1 to maintain this rate range. However, the new economic projections for 2026 conveyed the most unwelcome news to the market. The Fed raised its 2026 Personal Consumption Expenditures (PCE) inflation forecast to 2.7%, up from the previous 2.4%, and noted that Iran's blockade of the Strait of Hormuz was a direct cause of rising oil prices. The dot plot indicated only one expectation of a 25 basis point rate cut in 2026, shattering the market's last hopes for a more accommodative monetary policy.
Powell explicitly pointed out the impact of the oil price shock. The market reacted strongly to this. Federal Reserve Chairman Powell stated unequivocally at the press conference, “The oil price shock is indeed reflected.” In his opening statement, he mentioned that recent inflation expectations “have risen in the past few weeks, which may reflect the significant increase in oil prices due to supply disruptions,” referring to the closure of the Strait of Hormuz, which has affected about 20% of global oil transport since the end of February. Core PCE rose by 3.0% over the 12 months ending in February, well above the Fed's 2% target. Powell refused to compare the current situation to the stagflation of the 1970s, believing that the unemployment rate remains close to normal levels, but acknowledged the tension between the Fed's dual mandate in the current environment.