The peace between the US and Iran did not hold Bitcoin back: the hawkish rhetoric of the Fed proved stronger
The signing of a historic memorandum of understanding between the US and Iran was, without a doubt, the key geopolitical event of the week. The 14-point document aims to end hostilities and stabilize the region, providing for a partial lifting of sanctions and a roadmap for Tehran's nuclear program. It would seem that such a significant détente should have been a powerful catalyst for risk assets, including Bitcoin. However, the market once again demonstrated that macroeconomic factors take priority over geopolitics.
The news of the memorandum's signing triggered a short-term spike: Bitcoin jumped to $66,315. Oil and gold, on the other hand, moved into negative territory as the geopolitical premium instantly evaporated. But the investors' joy was short-lived. As soon as the Federal Reserve's verdict was announced, the leading cryptocurrency's quotes headed downward.
The Fed Changes the Game
New Fed Chair Kevin Warsh left the key interest rate unchanged at 3.50-3.75% at his first meeting on June 17. However, the rhetoric proved far more important. Any hints of possible policy easing disappeared from the official statement. Moreover, 9 of the 18 Committee members now forecast at least one rate hike by the end of 2026. This is a stark departure from previous market expectations, which had hoped for a pause or even a cut.
The regulator's hawkish stance confirms Citadel Securities' concerns about growing risks of a rate hike as early as September. Rising wages, sustained consumer activity, and record investments in AI are keeping inflation around 4.2% — significantly above the 2% target.
Market Reaction and Conclusions
Markets reacted immediately. The S&P 500 fell 1.5%, the Nasdaq lost 2%, and the Dow Jones dropped 160 points. The yield on two-year government bonds jumped 11 basis points to 4.153%, and ten-year yields rose 12 basis points to 4.469%. The cryptocurrency sector fully mirrored the movement of traditional markets: a mass exodus of investors from risk instruments began.
At the time of writing, Bitcoin is trading near $63,800, losing 2.8% over the past 24 hours and sitting 4% below its weekly high of $67,203.
My professional opinion: The current situation is a textbook example of how Bitcoin's medium-term trajectory is shaped by central bank monetary policy, not geopolitical headlines. As long as the Fed maintains a hawkish stance, any positive geopolitical backdrop will only result in short-term bounces. Investors should prepare for a period of heightened volatility and shift their focus to macroeconomic data, which will determine market movement in the coming months.