The Iran conflict has sharply changed expectations for Federal Reserve policy. Markets that had been pricing in four rate cuts this year are now down to just one, while the Fed has kept rates at 3.50% to 3.75%. For crypto, that points to a tighter liquidity backdrop, a setup that has often weighed on Bitcoin and altcoins.
According to the report, the shift came as oil prices jumped during the escalation in the U.S.-Israel and Iran conflict. Crude climbed to nearly $118 per barrel, keeping inflation around 3%, still above the Fed’s 2% target. Minutes from the Fed’s March meeting showed officials taking a cautious wait-and-see stance. Policymakers also warned that higher energy prices linked to Middle East tensions could lift short-term inflation and make rate cuts harder to deliver.
Oil retreat after ceasefire has not restored easing expectations
After a two-week ceasefire, oil fell from $115 to below $95. That eased some inflation pressure and reopened discussion around possible policy easing. Even so, the crypto market remains stuck in uncertainty. The report says Bitcoin may struggle to break higher without a clear signal that rate cuts are returning to the table.
Past market cycles show the same pattern. In 2022, when the Fed kept rates high, Bitcoin dropped below $20,000. In 2023, delayed cut expectations left BTC range-bound for months. By contrast, when rate cuts were priced in during mid-2025, Bitcoin surged above $100,000. Those examples highlight how closely crypto prices track shifts in Fed expectations.
CPI data and cut probabilities are now in focus
Traders remain cautious for now. CME data shows 99.5% of the market expects no change in April, while only 25.4% expect a December rate cut. That puts fresh attention on the upcoming April CPI reading, which the report identifies as the next major test for whether the oil-driven inflation shock is fading.
The article also points to possible leadership changes at the Fed. Jerome Powell is expected to leave in May, and Kevin Warsh is seen as more supportive of lower rates. At this stage, oil prices, inflation readings, and rate-cut expectations remain the main variables shaping crypto’s near-term direction.