March 19 Market Summary: Powell Says What the Market Least Wants to Hear, U.S. Stocks Plunge 600 Points, Bitcoin "Sells the News"

Author: Deep Tide TechFlow

U.S. Stocks: The “Flash Crash Moment” After Powell’s Press Conference

On Wednesday, the Federal Reserve held interest rates steady at 3.5%-3.75%, with the dot plot maintaining expectations of one rate cut in 2026 and another in 2027—everything was as expected, and the market remained calm.

But Powell’s comment at the press conference ignited a sell-off.

“We expect to make progress on inflation, but the progress may not be as much as we hope,” Powell said.

Major stock indexes then fell to their lows for the day. The Dow Jones Industrial Average dropped over 600 points at its peak, down 1.3%, while the S&P 500 and Nasdaq Composite declined 0.9%.

This was the answer investors had been waiting for on March 18: not “Will the Fed keep rates unchanged” (that was already certain), but “How does Powell define ‘the next’.” The answer: inflation is more stubborn than expected, and rate cuts are further away than anticipated.

The dot plot’s “hawkish details”: Seven members project zero rate cuts in 2026.

Out of 19 FOMC participants, 7 expect rates to stay unchanged this year, one more than in December’s last update. The biggest change is the upward revision of inflation expectations for 2026, with core PCE and overall PCE both forecast at 2.7%, still above the Fed’s 2% target.

While forecasts for the coming years show considerable dispersion, the median outlook is for one more rate cut in 2027, with the federal funds rate stabilizing around 3.1% in the long term.

Powell avoided using the term “stagflation,” but acknowledged that “the dual mandate is under tension.”

He pushed back against the idea that the U.S. economy is experiencing “stagflation”—a bleak mix of rising prices, slow growth, and high unemployment. While admitting that the Fed’s dual goals of price stability and full employment are under strain, he said, “That’s not the situation we’re in.”

“When I use the term stagflation, I always point out that it’s a term from the 1970s, when unemployment was in double digits, inflation was very high, and the pain index was extreme. That’s not the case now. Our actual unemployment rate is very close to long-term normal levels, and inflation is about one percentage point above our target… I reserve the term stagflation for more severe situations.”

But the market isn’t convinced. Powell said oil price shocks could weigh on the U.S. economy. “The net effect of oil price shocks remains some downward pressure on spending and employment, and some upward pressure on inflation.”

That’s the definition of stagflation, regardless of Powell’s reluctance to use the term.

Powell also touched on politics, stating that “before I consider leaving the Board, I have no intention of doing so,” if Kevin Warsh’s nomination is delayed, he would serve as interim chair. He added that once the issue is resolved, he has not decided whether to continue as a Fed governor.

Powell’s term as a governor runs until early 2028. This means that even if Trump nominates Warsh as chair, Powell can still vote on FOMC decisions and influence monetary policy.

Oil Prices: War Enters Day 19, the Strait of Hormuz “Semi-Closed” Becomes the New Normal

As of March 12, Iran had confirmed 21 attacks on commercial ships. Warnings and subsequent attacks caused a sharp decline in maritime transport, with oil tanker traffic dropping by about 70%, and over 150 ships anchoring outside the strait to avoid risks.

On March 8, oil prices broke above $100 per barrel for the first time since Russia’s invasion of Ukraine in 2022. On March 11, the International Energy Agency (IEA) agreed to release 400 million barrels from emergency reserves—equivalent to about four days of global consumption.

The IEA states that the Middle East conflict is causing the largest supply disruption in the history of the global oil market. Due to the flow of crude oil and petroleum products through the Strait of Hormuz dropping from about 20 million barrels per day pre-war to a trickle now, capacity to bypass this critical waterway is limited, and storage facilities are filling up. Gulf countries have cut total oil production by at least 10 million barrels per day.

“Selective Opening”: Iran Allows Some Allies’ Ships to Pass

On March 5, Iran’s Islamic Revolutionary Guard Corps announced that Iran would only block the Strait of Hormuz for ships from the U.S., Israel, and their Western allies. This was reaffirmed on March 8. On March 13, Turkey’s Transport Minister Abdulkadir Uraloğlu said Iran approved a Turkish ship’s passage through the strait. Reports also indicate that two gas carriers flying Indian flags and a Saudi oil tanker carrying 1 million barrels en route to India have been permitted to pass.

However, this “selective opening” does little to ease the global supply disruption. According to UK Maritime Trade Operations (UKMTO), since the war began, no more than five ships pass through the strait daily, compared to an average of 138 ships pre-war.

Trump’s “Escort Coalition” Plan Fails to Take Off

U.S. President Trump called on other countries to help reopen the Strait of Hormuz, which typically transports about one-fifth of the world’s oil supply. So far, responses have been tepid; the countries he named—including China, Japan, France, and the UK—have not publicly committed to deploying naval forces to protect the strait.

In an interview with the Financial Times on Sunday, Trump said if his proposal “receives no response or negative responses,” NATO will face a “very bad” future. Japan and Australia both said Monday they have no plans to send warships.

Oil Price Outlook: Short-term $109, Year-end Could Drop to $70

If the Strait of Hormuz remains severely disrupted, Brent crude could reach $100 per barrel, but by the end of 2026, prices are expected to fall back to around $70 as markets adapt. In scenarios where Iran’s regime attacks regional energy infrastructure and disrupts shipping, Brent could rise above $130 per barrel.

Despite current price surges, the U.S. Energy Information Administration (EIA) still expects prices to decline later this year if supply flows normalize. EIA now forecasts an average of $79 per barrel for Brent in 2026—significantly higher than the $58 predicted just a month ago.

Cryptocurrency: “Sell the News” as Expected, the 8th Time in History

Following Wednesday’s Fed decision, the crypto market reacted with the classic “sell the news” pattern.

Bitcoin maintained strong momentum heading into the March FOMC, rising for eight consecutive days and trading above $74,000. However, data from lending platform Two Prime suggests this strength may mask a recurring pattern—FOMC meetings have historically been short-term bearish catalysts for BTC.

Looking back at 2025, Bitcoin experienced negative returns within 48 hours after 7 out of 8 FOMC meetings. Even during the big rally in May, the broader trend pointed to continued weakness after meetings, regardless of whether the Fed held rates steady or changed policy.

With Bitcoin in a bullish position before the meeting, the risk is shifting toward the classic “sell the news” reaction.

Powell’s Comments on Oil Prices Inject More Uncertainty into Crypto Markets

Fed Chair Powell said rising energy prices are affecting inflation outlooks, but “nobody knows” how long the impact will last.

He stated that rising oil prices “certainly” feature in policymakers’ higher inflation outlooks this year, raising the forecast to 2.7% from 2.4%. He dismissed comparisons to 1970s stagflation, noting unemployment is near long-term norms and inflation is only slightly above target.

But these comments did little to soothe crypto markets. The Strait of Hormuz crisis pushed oil prices above $119 per barrel in early March 2026. Rising oil prices increased inflation expectations, reducing the likelihood of rate cuts and decreasing liquidity in risk assets.

The key market focus now: ETF fund flows.

Prioritized as follows: (1) Net flow data for Bitcoin ETFs from Farside Investors on March 19-20; (2) Bitcoin market share—rising to 60% or falling to 55%; (3) whether Ethereum can hold the $2,000 psychological level; (4) XRP ETF fund flows—reversal or continued outflows; (5) Solana’s price reaction relative to Bitcoin, as a signal of altcoin sentiment strength.

ETF fund flows are the decisive indicator. Continuous net inflows on March 19-20 suggest institutions interpret the meeting as positive or at least neutral.

Bitcoin’s three potential paths: currently, “neutral hold” seems most likely.

If the Fed signals that rate cuts in 2026 are unlikely, risk assets could be dragged down. In that case, Bitcoin might fall to $65,000, with altcoins struggling more.

If the Fed retains the possibility of a rate cut later this year, Bitcoin could trade between $68,000 and $74,000.

Finally, if policymakers signal the possibility of two rate cuts, the crypto market might see this as a positive signal. This could push Bitcoin above $75,000, with larger gains for altcoins.

Currently, the Fed appears to favor the second path—expecting one rate cut but with a hotter inflation outlook and delayed cuts. This suggests Bitcoin could see a 3-5% “sell the news” correction in the next 48 hours, then oscillate between $68,000 and $74,000.

Summary for Today: Powell Said What the Market Least Wanted to Hear

On March 18, the market held its breath awaiting Powell’s press conference. When the answers came, everyone was disappointed.

Fed Chair Powell emphasized the uncertainty caused by oil price shocks and said that U.S. progress on inflation was less than expected. Stocks then declined.

2026 PCE inflation is forecast at 2.7%, above the target, and the Fed indicated it is unwilling to cut rates until inflation shows clearer signs of improvement. Most FOMC members do not see rate hikes as the baseline scenario, but if inflation doesn’t further advance, rate cuts are off the table.

This was the market’s takeaway on March 18:

Inflation is more stubborn than expected—2026’s overall PCE and core PCE are both forecast at 2.7%, well above the Fed’s 2% target.

Rate cuts are further away than expected—the dot plot maintains one cut in 2026, but 7 members expect no rate cut this year.

The impact of oil shocks is “uncertain”—Powell admits the war’s effect on the economy is “too early to tell,” but has already raised inflation expectations from 2.4% to 2.7%.

Powell refuses to step down—even if Warsh is nominated as chair, Powell will remain a governor until 2028, continuing to vote on FOMC decisions.

Market reactions to these answers were uniform: U.S. stocks plunged, oil prices surged, and crypto experienced “sell the news.”

This is not the end of March 18, but the beginning of a longer period of uncertainty. Will oil prices fall back? Can inflation cool down? Will the Fed cut rates in September? Or will they wait until 2027?

No one knows. Even Powell said, “If we should skip the SEP (Economic Projections Summary) at one meeting, this one would be the best choice because we really don’t know.”

But they still released projections. The market still reacted. This is March 18, 2026—a moment defined by uncertainty yet marked by certainty.