Bitcoin Price Drops Amid Rising Geopolitical Tensions and Fed Meeting Uncertainty
Cryptocurrencies experienced a sharp decline on Wednesday as escalating geopolitical tensions in the Middle East gripped investors’ attention, following the July Federal Reserve meeting.
Bitcoin (BTC) fell to $64,500, down from the $66,500 level it hovered around after Federal Reserve Chair Jerome Powell‘s press conference, marking a more than 2% drop in the past 24 hours. Major altcoins like Ether (ETH), Solana (SOL), Avalanche (AVAX), and Cardano (ADA) also saw declines, though Ripple’s XRP managed to retain some of its earlier gains. The broader crypto market, as represented by the CoinDesk 20 Index, was down 0.8% over the same period.
The downturn occurred amid a report from The New York Times that Iranian leaders had ordered retaliatory strikes against Israel following the assassination of Hamas leader Ismail Haniyeh in Tehran. This development heightened fears of a wider conflict in the region.
Earlier in the day, the Federal Reserve decided to keep benchmark interest rates unchanged, providing little assurance that a much-anticipated rate cut in September is certain. Powell emphasized that no decisions have been made regarding a September cut, but noted that there is a “broad sense” that the Fed is moving closer to reducing rates.
While digital assets took a hit, traditional markets saw gains. The yield on the 10-year U.S. Treasury fell by 10 basis points, gold rose 1.5% to $2,450—just shy of its record high—and WTI crude oil prices surged 5%. Equities also performed well, with the tech-heavy Nasdaq 100 index climbing 3%, and the S&P 500 closing 2.2% higher, driven by a 12% gain in Nvidia (NVDA).
The divergence between asset classes could be attributed to traders’ positioning ahead of the Fed meeting, according to Zach Pandl, head of research at Grayscale. “Equities might have been under-owned following the recent downturn, while Bitcoin had seen strong inflows, and gold rallied after a period of weakness,” Pandl noted.
“Looking at the bigger picture, the mix of potential Fed rate cuts, bipartisan attention on crypto policy, and the possibility of a second Trump administration could support a weaker U.S. dollar, which would be very positive for Bitcoin,” he concluded.
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