Bitcoin price fell below $71,000 after US Federal Reserve Chairman Jerome Powell noted the impact of the increase in energy prices on inflation. The fact that the war in Iran has increased oil prices has brought concerns about the risk of inflation in global markets to the agenda again.
Fed raises inflation expectations
While the Fed kept the policy rate constant in line with expectations, Powell stated at the press conference that the rise in energy costs was reflected in the inflation outlook. Stating that the shock in oil prices was included in inflation projections, Powell emphasized that there is uncertainty about the permanence of this effect.
It seems that the oil-related shock is reflected in inflation forecasts, but it is not yet clear how long its effect will last.
Fed officials increased the inflation expectation for 2026 from 2.4% to 2.7%. This update indicates that price pressures may continue for longer than anticipated. Despite this, Powell stated that it is not correct to compare the current situation with the stagflation period in the 1970s.
Cautious approach to stagflation concerns
Recalling that the unemployment rate remains close to long-term averages and inflation is only marginally above the target, Powell stated that current conditions do not reflect a more severe economic scenario. He stated that there is a tension between economic growth and inflation targets and that this balance is being managed.
The current situation does not coincide with the concept of stagflation, which describes more serious economic conditions
These statements increased the selling pressure in markets that were already under the influence of weak February inflation data and geopolitical risks. In particular, the uncertainty created by the developments in Iran regarding energy prices led to a cautious trend in investor behavior.
A large-scale decline was seen in the markets
Bitcoin price dropped to $70,900 during the day and lost approximately 5% in the last 24 hours. Ethereum decreased by 6.5% in the same period. This movement in crypto assets appeared parallel to the decrease in risk appetite.
A similar picture stood out in traditional markets. The S&P 500 index closed the day with a decrease of 1.4% and the Nasdaq with a decrease of 1.5%. The gold price fell below $4,850 per ounce, losing 3.1% on the day and falling to its lowest level in more than a month.
Stocks linked to crypto assets also experienced sharp declines. Shares of Strategy, one of the largest institutional Bitcoin investors, and Ethereum-focused Bitmine, fell between 5% and 6%. While Galaxy shares decreased by approximately 7%, Gemini shares lost 15% and approached their lowest levels after the IPO.
