Just a few days ago, Bitcoin was experiencing a remarkable surge, reaching a six-week high of $76,000. Since the onset of the conflict in the Middle East, it had gained $13,000 and emerged as one of the top-performing assets amid this new wave of uncertainty (perhaps only second to oil).
However, the recent downturn has been quite severe. Earlier today, Bitcoin’s value dipped to around $68,000—a staggering loss of $8,000 within just a few days. Here are some potential factors contributing to this decline.
Federal Reserve’s Stance
While most investors and analysts anticipated that there would be no alterations to key interest rates from the Federal Reserve during its latest meeting this year, Chair Powell’s hawkish remarks post-meeting added more pressure on risk-sensitive assets like cryptocurrencies.
Following his penultimate FOMC meeting appearance, Powell expressed ongoing concerns regarding persistently high inflation levels—especially given that tensions in the Middle East have driven oil prices up significantly.
“The rate forecast hinges on economic performance; if we don’t see progress in that area, then rate cuts won’t happen,” stated Powell.
“FOMC meetings can act as catalysts for volatility; however their effects vary based on current risk conditions,” noted Swissblock last Thursday. “In high-risk scenarios like now, FOMC events often lead to rejections or accelerate declines.”
Predictive markets and certain futures products focused on Fed policies suggest that interest rate reductions may be stalled for over a year. A recent post by The Kobeissi Letter highlighted how significant such an outcome could be if it materializes.
What an unexpected twist:
The futures-implied BASE CASE now indicates that interest rate cuts by the Fed will pause until July 2027.
This is noteworthy considering discussions back in late-2025 revolved around whether there would be three or four rate cuts throughout 2026.
The Ongoing Conflict
The escalating situation in the Middle East is undeniably another critical factor influencing Bitcoin’s recent price drop. This became particularly clear early Sunday when Bitcoin plummeted several thousand dollars shortly after President Trump threatened military action against Iran unless they allowed safe passage through vital shipping routes like the Strait of Hormuz.
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Bitcoin Price Plummets to $68K Following Trump’s Threats Against Iran
The President issued an ultimatum giving Iran 48 hours for compliance before facing further attacks from U.S forces.
ETF Withdrawal Impact
The spot Bitcoin ETFs enjoyed seven consecutive days of gains between March 9 and March 17. The peak price reached at $76k coincided with inflows hitting approximately $200 million on Tuesday; however subsequent days saw drastic changes.
On Wednesday alone investors withdrew about $163.52 million followed by another withdrawal amounting up-to$90 .19million Thursday ,and finally$52 .11million Friday respectively .
This led overall net positive ending week tally standing at only95 .18 million despite witnessing over300 million being withdrawn during last three trading sessions correlating with asset price correction.
