The historical tension between the US and Iran did not hold Bitcoin back: the Fed's tough stance crashed the market
The signing of the peace memorandum between the US and Iran was undoubtedly a landmark geopolitical event. However, optimism in the crypto market proved short-lived. Bitcoin failed to hold its gains and came under pressure again, losing 2.80% over the past 24 hours and dropping to around $63,800. The reason is the hawkish rhetoric from the Federal Reserve, which once again reminded the market who is in charge.
Peace Memorandum: Short-Term Boost, But No Salvation
The document signed by Donald Trump, which includes 14 key points, aims to end hostilities and stabilize the region. The agreement, brokered with the mediation of Pakistan, Qatar, Saudi Arabia, and Turkey, provides for a partial lifting of sanctions and a timeline for technical negotiations on Tehran's nuclear program. Trump called it "the art of the deal."
The market reaction was immediate: Bitcoin surged to $66,315, while oil and gold declined as the geopolitical risk premium disappeared. However, investor joy proved premature.
The Fed Strikes: Hawks Take Over
New Federal Reserve Chairman Kevin Warsh held his first Federal Open Market Committee meeting on June 17. As a result, the key interest rate was left unchanged at 3.50-3.75% for the fourth consecutive time. However, the main surprise was the complete disappearance from the official statement of any hints at possible policy easing in the foreseeable future.
Moreover, 9 out of 18 Committee members now forecast at least one rate hike in 2026. This forecast is a stark departure from previous market expectations, which had anticipated a cut or, at the very least, a prolonged pause. The hawkish rhetoric confirms warnings from Citadel Securities analysts about growing risks of a rate hike as early as September.
Wage growth, sustained consumer activity, and record investments in artificial intelligence keep inflation around 4.2% — significantly above the Fed's 2% target.
Markets in Panic: Bitcoin Is No Exception
The reaction from traditional markets was immediate: the S&P 500 fell 1.5%, the Nasdaq lost 2%, and the Dow Jones dropped 160 points. The yield on two-year Treasury notes jumped 11 basis points to 4.153%, while the ten-year yield rose 12 basis points to 4.469%.
The cryptocurrency sector fully mirrored the movement of traditional markets, showing a massive flight of investors from risky assets. Bitcoin could not withstand the pressure from the Fed, and even the positive geopolitical backdrop of the Washington-Tehran agreement did not help. At the time of writing this review, the market's flagship asset is trading 4% below its weekly high of $67,203.
My analysis: The current situation is a clear lesson for all crypto investors. High-profile geopolitical events can only provide short-term support for the price. However, in the medium term, the trajectory of Bitcoin and other risk assets continues to be shaped by the central bank's monetary policy. As long as the Fed maintains its hawkish stance, any rally will be temporary. The key support level of $61,464 is now dangerously close.