Bitcoin Tumbles Below $65K Post-FOMC as Middle East Tensions Flare

Cryptocurrencies fell sharply on Wednesday as rising geopolitical risks have captured investors’ attention following the conclusion of the July Federal Reserve meeting.

Bitcoin {{BTC}} has fallen to $64,500 from $66,500 following Federal Reserve Chair Jerome Powell’s press conference, and is down more than 2% in the past 24 hours. Altcoin majors such as Ether {{ETH}}, Solana {{SOL}}, Avalanche’s AVAX {{AVAX}} and Cardano {{ADA}} also fell, while Ripple’s XRP held onto some of the gains it made earlier today. The broad-market crypto benchmark CoinDesk 20 Index was 0.8% lower than it was 24 hours ago.

CoinDesk 20 tokens (CoinDesk)

The sell-off comes after the New York Times reported that Iranian leaders ordered retaliation against Israel following the killing of Hamas leader Ismail Haniyeh in Tehran, raising the risk of a wider conflict in the region.

The Fed left its benchmark interest rate unchanged earlier today, giving little indication that a widely expected September rate cut is warranted. The Fed’s Powell said that while no decision has yet been made on a September cut, the “general consensus” is that we are getting closer to cutting rates.

While digital assets lost ground, most traditional asset classes rose on the day. While 10-year U.S. Treasury yields fell 10 basis points, gold rose 1.5% to $2,450, just shy of record levels, and WTI crude oil prices rose 5%. Stocks also rose on the day, with the tech-heavy Nasdaq 100 index rallying 3% and the S&P 500 closing 2.2% higher, led by a 12% gain from chipmaker giant Nvidia (NVDA).

Grayscale Research President Zach Pandl said in an emailed note that the different performances across asset classes could be due to investors’ positions ahead of the Fed meeting.

“Stocks may be a little less owned after the recent decline, while Bitcoin is coming off a strong period with solid inflows, while gold has recovered after a period of weakness,” he said.

“Looking at the bigger picture, the Fed’s rate cuts, the bipartisan focus on crypto policy, and the possibility of a second Trump Administration arguing for a weaker US dollar should be viewed as very positive for Bitcoin,” he concluded.

UPDATE (July 31, 2024, 21:30 UTC): Added grayscale comment.