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

Looking back at 2025, Bitcoin recorded negative returns within 48 hours after 7 out of 8 FOMC meetings.

Author: Deep潮 TechFlow

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

On Wednesday, the Federal Reserve kept interest rates unchanged in the 3.5%-3.75% range as expected, with the dot plot maintaining expectations of one rate cut in 2026 and another in 2027 — all in line with market expectations, leaving little market reaction.

But Powell’s comment at the press conference triggered 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 one point, down 1.3%, while the S&P 500 and Nasdaq Composite both declined 0.9%.

This was the answer markets had been waiting for on March 18: not “Will the Fed hold rates steady” (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.

The “Hawkish Details” of the Dot Plot: Seven members expect zero rate cuts in 2026.

Out of 19 FOMC participants, 7 now expect rates to stay unchanged this year — one more than in December’s update. The biggest change is the upward revision of inflation expectations for 2026, with core PCE and overall PCE both projected 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% long-term.

Powell avoids using “stagflation” but admits “dual mandate is under tension.”

Powell 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 acknowledging that the Fed’s dual goals of price stability and maximum employment are under tension, he said, “That’s not where we are.”

“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 1 percentage point above our target… I reserve the term stagflation for more severe situations.”

But markets aren’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 refusal to use the term.

Powell also touched on politics, saying, “Before I leave the Board, I have no intention of stepping down,” 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 governor runs until early 2028. This means: Even if Trump appoints Warsh as chair, Powell can still vote on FOMC and influence monetary policy.

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

As of March 12, Iran had confirmed 21 attacks on merchant 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, IEA members agreed to release 400 million barrels from emergency reserves — roughly four days’ worth of global consumption.

IEA states that the Middle East conflict is causing the largest supply disruption in global oil markets in history. Since the war, flow through the Strait of Hormuz has plummeted from about 20 million barrels per day pre-war to a trickle now. Capacity to bypass this critical waterway is limited, storage facilities are filling up, and Gulf countries have cut total oil output by at least 10 million barrels per day.

“Selective Opening”: Iran allows some allies’ ships to pass.

On March 5, Iran’s Revolutionary Guard announced it would only block the Strait for U.S., Israeli, and Western allied ships. This was reaffirmed on March 8. On March 13, Turkey’s transport minister Abdulkadir Uraloğlu said Iran approved a Turkish ship’s passage. Reports also indicate two gas carriers flying Indian flags and a Saudi oil tanker carrying 1 million barrels to India have been permitted through.

But this “selective opening” doesn’t truly ease the global supply disruption. According to UKMTO, since the war began, fewer than 5 ships pass through the strait daily — far below the historical average of 138 ships per day.

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 global oil supplies. So far, responses have been tepid; countries like China, Japan, France, and the UK have not publicly committed to deploying naval forces.

In a Sunday interview with the Financial Times, Trump said if his proposal “receives no response or negative responses,” NATO faces 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 should fall back to around $70 as markets adapt. In scenarios where Iran’s regime attacks energy infrastructure and damages shipping, Brent could surge above $130.

Despite current price spikes, EIA still expects prices to fall later this year if supply flows normalize. EIA now forecasts an average of $79 per barrel for Brent in 2026 — a significant increase from its previous forecast of $58 issued a month ago.

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

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

Bitcoin, which had been strong heading into the March FOMC, rose for eight consecutive days, 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 of 8 FOMC meetings. Even during the big rally in May, the broader trend points to continued weakness after meetings, regardless of whether the Fed holds rates or shifts policy.

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

Powell’s comments on oil prices: adding more uncertainty to crypto markets.

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

He stated that rising oil prices “certainly” appear in policymakers’ higher inflation outlooks this year, raising the forecast to 2.7% from 2.4%. He pushed back against 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 boost inflation expectations, reducing the likelihood of rate cuts and decreasing liquidity in risk assets.

Key Market Focus: ETF Fund Flows

Prioritized as follows: (1) Bitcoin ETF net flows from Farside Investors on March 19-20; (2) Bitcoin market share — whether 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.

Three potential paths for Bitcoin: “Neutral hold” seems most likely now.

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

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

Finally, if policymakers signal two rate cuts are possible, markets may see this as a positive. Bitcoin could break above $75,000, with larger gains for altcoins.

Currently, the most probable scenario is the second: the Fed maintains expectations of one rate cut, but inflation outlook is hotter, and rate cuts may be delayed. This could lead to a 3-5% “sell the news” correction in Bitcoin over the next 48 hours, followed by sideways movement between $68,000 and $74,000.

Today’s Summary: Powell Delivered the Market’s Worst-Case News

On March 18, markets held their breath awaiting Powell’s press conference. When the answer was revealed, everyone was disappointed.

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

2026 PCE inflation is projected at 2.7%, above the target, with the Fed indicating no rate cuts until inflation shows clearer signs of improvement. Most FOMC members do not see rate hikes as the baseline scenario, but if inflation stalls, no rate cuts will occur.

This was the market’s takeaway on March 18:

Inflation is more stubborn than expected — 2026 projections for overall and core PCE are both 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 cuts this year.

The impact of oil shocks is “unknown” — Powell admits the war’s effect on the economy is “too early to tell,” but inflation expectations have already been raised 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 the FOMC.

Market reactions were unanimous: U.S. stocks plunged, oil prices soared, and cryptocurrencies experienced “sell the news.”

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

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

But they still released forecasts. Markets responded. This is March 18, 2026 — a moment defined by uncertainty, yet marked by certainty.