The geopolitical peace between the US and Iran could not withstand the hawkish rhetoric of the Fed: Bitcoin is under pressure again.
The signing of a historic memorandum of understanding between the US and Iran became a major geopolitical event, but failed to reverse the bearish trend in the Bitcoin market. The leading cryptocurrency, after a brief short-term boost, once again came under the pressure of macroeconomic factors. At the time of writing this review, BTC is trading near the $63,800 mark, losing 2.80% over the past 24 hours.
The peace agreement signed by Donald Trump includes 14 key points aimed at ending hostilities and stabilizing the region. The document provides for verification mechanisms, a partial lifting of sanctions, and a clear timeline for negotiations on Tehran's nuclear program. Pakistan's mediating role, with support from Qatar, Saudi Arabia, and Turkey, was decisive in reaching this compromise.
The news of the memorandum triggered a sharp but short-lived surge in Bitcoin to $66,315 — the geopolitical détente gave momentum to risk assets. Oil and gold, on the contrary, immediately turned negative as the geopolitical premium disappeared. However, investors' joy proved premature.
The key factor that brought markets back to reality was the hawkish rhetoric from the Federal Reserve System. The new Fed Chair, Kevin Warsh, held his first Federal Open Market Committee meeting, after which the interest rate was left unchanged at 3.50-3.75%. However, any hints of possible policy easing disappeared from the official statement.
This shift to a neutral, fully data-dependent approach caught markets off guard. Moreover, 9 out of 18 Committee members now forecast at least one rate hike in 2026. The forecast is drastically different from previous expectations, which assumed a cut or a prolonged pause. The hawkish rhetoric confirms Citadel Securities' warnings about growing risks of a rate hike as early as September.
Markets reacted immediately: the S&P 500 fell by 1.5%, the Nasdaq lost 2%, and the Dow Jones dropped by 160 points. The yield on two-year Treasury bonds jumped by 11 basis points to 4.153%, and on ten-year bonds by 12 points to 4.469%. The cryptocurrency sector fully mirrored the movement of traditional markets, where a massive flight of investors from risky instruments was observed.
Bitcoin could not withstand the pressure from the Federal Reserve. Even the positive geopolitical backdrop did not help. The market flagship is trading 4% below its weekly high of $67,203. The current situation clearly illustrates the most important rule for all crypto investors: major events on the global stage can provide short-term support for the price, but in the medium term, Bitcoin's trajectory is shaped by the central bank's monetary policy.
My analysis: The scenario where the geopolitical premium is completely offset by macroeconomic pressure is a classic one for risk assets. As long as the Fed maintains a hawkish stance, any positive geopolitical backdrop will only be a temporary respite, not the start of a new rally. Investors should prepare for increased volatility and reconsider their risk management strategies ahead of a potential September tightening.