The US-Iran peace did not save Bitcoin: the hawkish Fed proved stronger than geopolitics
The signing of a historic peace memorandum between the US and Iran, which seemingly should have been a powerful catalyst for risk assets, failed to prevent Bitcoin from falling. Despite a short-term spike to $66,315, the leading cryptocurrency once again came under pressure from the hawkish rhetoric of the Federal Reserve. At the time of writing, BTC is trading near the $63,800 mark, losing 2.80% over the past 24 hours, and is significantly closer to its weekly low of $61,464 than to recent local highs.
Geopolitical De-escalation: Short-Term Impulse, Not a Trend
The peace memorandum, signed by Donald Trump, includes 14 key points aimed at ending hostilities and stabilizing the situation in the Middle East. The agreement provides for the launch of verification mechanisms, a partial lifting of sanctions, and a clear timeline for technical negotiations on Tehran's nuclear program. Pakistan's mediation role, with support from Qatar, Saudi Arabia, and Turkey, made this historic compromise possible.
The news of the memorandum instantly impacted markets: Bitcoin jumped to $66,315, oil and gold turned negative, and the geopolitical premium immediately disappeared. However, investor joy proved too fleeting. As soon as the Fed's verdict loomed on the horizon, all market participants' attention shifted back to macroeconomics.
The Fed: Hawkish Surprise and Paradigm Shift
New Federal Reserve Chairman Kevin Warsh held his first Federal Open Market Committee meeting on June 17. Following the meeting, the agency decided for the fourth consecutive time to keep the key interest rate at 3.50-3.75%. However, the main surprise was not the decision itself, but the rhetoric. Any hints of possible policy easing in the foreseeable future disappeared from the official statement. Moreover, 9 out of 18 Committee members now forecast at least one interest rate hike in 2026. This forecast is drastically different from previous expert expectations, which anticipated rate cuts or, at the very least, a prolonged pause.
The hawkish rhetoric confirms Citadel Securities' warnings about growing risks of a rate hike in September. Rising wages, sustained consumer activity, supply-side constraints, and record investments in artificial intelligence are keeping inflation at around 4.2% annually—significantly above the Fed's 2% target.
Markets reacted immediately. The S&P 500 index fell by 1.5%, the tech-heavy Nasdaq lost 2%, and the Dow Jones dropped by 160 points. Government bond yields rose noticeably: the two-year yield increased by 11 basis points to 4.153%, and the ten-year yield rose by 12 basis points to 4.469%.
Crypto Market: Full Correlation with Traditional Finance
The cryptocurrency sector fully mirrored the movement of traditional markets, which saw a mass exodus of investors from risk instruments. Bitcoin could not withstand the pressure from the Federal Reserve. It was not helped even by the positive geopolitical backdrop of the agreement between Washington and Tehran. At the time of writing, the market flagship is trading 4% below its weekly high of $67,203.
My analysis: The current situation is a stark reminder that, despite growing institutional maturity, Bitcoin remains a high-risk asset whose fate in the medium term is inextricably linked to Fed monetary policy. Geopolitical events can provide short-term impulses, but the fundamental driver is the cost of liquidity. As long as inflation remains above target and Fed rhetoric becomes increasingly hawkish, pressure on BTC will persist, and a break below the $61,000 support level could open the door to a deeper correction.