Bitcoin price falls as Fed dampens rate cut hopes for 2026
A fresh wave of macro-uncertainty rattled Wall Street and the crypto markets after Fed chair Jerome Powell signalled that interest rate cuts may be off the table for the remainder of 2026. The Fed rate decision on Wednesday sent bitcoin (BTC-USD) sliding 5% over the past 24 hours to hover above the $70,000 mark, dragging the global cryptocurrency market cap down 4.4% to $2.5tn. The tech-heavy Nasdaq followed suit, closing at its session low with a 1.5% loss as investors digest a "hawkish hold" from the US central bank. Read more: Crypto live prices This synchronised sell-off underscores bitcoin's (BTC-USD) persistent tendency to trade in lockstep with equity indices, particularly high-growth tech stocks. While the Fed held rates steady as expected, the primary catalyst for the sell-off was Powell’s admission that rising energy costs are complicating the fight against inflation. The Fed lifted its inflation forecast for the year to 2.7%, up from the previous 2.4% projection. Read more: Stocks tumble ahead of BoE and ECB rate decisions During his post-meeting press conference, Powell addressed the energy market's volatility head-on. "The oil (BZ=F, CL=F) shock for sure shows up" in higher inflation projections, Powell noted, though he cautioned that "nobody knows" yet how persistent the impact will be. Despite the inflationary pressure, Powell pushed back against comparisons to 1970s-style stagflation, arguing that unemployment remains near long-run norms and inflation is only "modestly" above the central bank's target. For bitcoin (BTC-USD), the timing of the Fed's stance is pivotal. After a struggle over the past weeks to break the $75,000 resistance level, the asset is now navigating a complex macro environment where it isn't quite a safe haven, but it isn't purely "risk-on" either. Speaking to Yahoo Finance UK, Fabian Dori, CIO at Sygnum Bank, characterised the current climate as a "hawkish hold" that places digital assets at a critical juncture. "Today's meeting will likely see the Committee keep rates unchanged while signalling that growth risks have increased and inflation progress has become more uneven," Dori said. "As most economic data predates the latest energy shock, Powell is unlikely to validate expectations for early cuts. Instead, we expect a cautious tone and a clear message that the Fed needs more evidence before easing." Read more: Oil prices soar following strikes on key energy facilities in the Middle East While structural tailwinds like ETF inflows and buying by digital asset treasury companies remain in place, the "higher-for-longer" interest rate bias is acting as a lid on the market. Dori noted that for long-term investors, the current volatility shouldn't necessarily trigger a panic. "From an investor perspective, this environment typically favours accumulation and portfolio rebalancing rather than tactical trading around the decision," Dori explained. "The long-term thesis remains intact, but near-term macro uncertainty may limit directional moves until the policy path becomes clearer. For now, bitcoin remains structurally strong but tactically exposed – it doesn’t need a dovish Fed to keep rising, but it does need the Fed to avoid any hawkish surprises." Read more: Download the Yahoo Finance app, available for Apple and Android.
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