Bitcoin Price Slips Below $71,000 as New Inflation Fears Dampen 2026 Rate Cut Hopes

Bitcoin (BTC-USD) dropped under $71,000 yesterday, as the Federal Reserve warned that rising oil prices are creating a fresh inflation headache. While the central bank kept interest rates steady, a shift in its future outlook triggered a sell-off in both crypto and stocks. Bitcoin reached a low of $70,900, marking a 5% drop in 24 hours. The Nasdaq also closed at its lowest point of the day as investors realized that the “higher for longer” era of interest rates is not ending yet.

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Jerome Powell Identifies “Oil Shock” as a Major Inflation Driver

During his press conference, Fed Chair Jerome Powell admitted that the recent spike in energy prices is already showing up in the government’s data. Because of the ongoing war in Iran, oil prices have surged, which naturally makes everything from shipping to manufacturing more expensive. Powell noted that “the oil shock for sure shows up” in higher inflation projections. Even though he cautioned that “nobody knows” how long this impact will last, the Fed has already raised its inflation forecast for 2026 from 2.4% to 2.7%.

The Federal Reserve Rejects “Stagflation” Concerns for Now

Some market experts are worried about stagflation, which is a dangerous mix of high inflation and a weak economy. However, Powell pushed back on this idea. He explained that unemployment is still at healthy levels and inflation is only slightly above the Fed’s 2% target. He stated that he would “reserve the term stagflation for a much more serious set of circumstances” and described the current situation as a “tension between the goals” that the bank is working to manage.

High Interest Rates Put Pressure on Crypto Companies

The news that rate cuts are being pushed further into the future hit crypto-related companies especially hard. Businesses that hold massive amounts of Bitcoin saw their share prices tumble along with the digital currency. Strategy (MSTR) fell 6% after the meeting, and Ethereum-focused Bitmine (BMNR) dropped 5%. The biggest loser of the day was the exchange Gemini (GEMI), which crashed 15% to its lowest price since its public debut last year. Investors are pulling money out of these “risk-on” assets because high interest rates make safer investments like government bonds look more attractive.

Market Liquidity Declines as Sentiment Turns Cautious

The drop in Bitcoin’s price shows that big traders are becoming much more careful. Before the Fed meeting, there was hope that a “dovish” tone, meaning a sign of future rate cuts, would push Bitcoin back toward its all-time highs. Instead, the “hawkish” update has forced many to lock in profits. Analysts believe the $70,000 level is now the most important level to watch. If Bitcoin fails to hold this support, it could quickly drop toward $68,000 as the market adjusts to the reality of higher inflation.

At the time of writing, Bitcoin is sitting at $71,087.40.

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