Cryptocurrency markets declined sharply as the combined impact of the United States Federal Reserve’s latest policy signals and rising oil prices linked to the Iran conflict unsettled investors.
Bitcoin dropped to around $71,313, marking a 4.62% fall, while Ethereum slid to approximately $2,201, reflecting a 5.92% decline during the same trading period.
A wave of forced liquidations swept across the crypto market, with total losses reaching $542 million over 24 hours, including $448 million from long positions.
The scale of the liquidation event marked one of the largest in recent weeks and highlighted the vulnerability of leveraged traders during sudden market shifts.
Market pressure intensified following the Federal Open Market Committee’s decision to maintain interest rates within the 3.5% to 3.75% range.
The central bank’s updated economic projections raised its 2026 inflation forecast to 2.7%, up from an earlier estimate of 2.4%, largely driven by rising oil prices.
The inflation outlook was influenced by supply disruptions linked to Iran’s blockade of the Strait of Hormuz, which has affected roughly 20% of global oil flows.
The Federal Reserve’s projections indicated only one potential rate cut in 2026, dampening expectations for a more supportive monetary policy environment.
“The oil shock for sure shows up,”
Jerome Powell said.
Powell also noted that inflation expectations have increased in recent weeks due to higher energy prices caused by supply disruptions.
Financial markets reacted quickly, with Bitcoin falling from around $74,000 to near $70,900 shortly after the Federal Reserve’s announcement.
Traditional markets mirrored the decline, as the Nasdaq dropped 1.5%, while the Dow Jones and S&P 500 reversed earlier gains and posted losses.
Treasury yields also climbed, reflecting investor concerns over persistent inflation and tighter financial conditions.
The breakdown of liquidations showed Bitcoin long positions accounted for $172 million, while Ethereum longs contributed $126 million to the total.
A total of 143,776 traders were liquidated globally, signalling widespread exposure to leveraged positions.
The largest single liquidation involved an Ethereum trade worth $17.98 million on Aster, underscoring the risks of aggressive market positioning.
Long-term Bitcoin holders were also reported to have sold more than 1,650 BTC, valued at roughly $117 million, following the Federal Reserve’s update.
Oil prices continued to climb, with Brent crude exceeding $110 per barrel after renewed attacks on regional energy infrastructure.
The combination of elevated oil prices and a cautious Federal Reserve stance has reduced the likelihood of near-term interest rate cuts.
Analysts suggest that the current environment may continue to weigh on risk assets, including cryptocurrencies, in the short term.
At the time of reporting, Bitcoin price was $70,440.23.