Bitcoin fell sharply on Thursday, erasing much of its recent recovery after hawkish signals from the Federal Reserve increased expectations of another U.S. interest rate hike.
The newly signed U.S.-Iran peace framework offered little support to the cryptocurrency market. Investors continued to favour technology and artificial intelligence stocks over more speculative assets.
Bitcoin Falls Below $64,000
Bitcoin declined 2.8% to $63,964.60 by 01:31 ET, or 05:31 GMT.
The world’s largest cryptocurrency had already come under pressure during overnight trading following the Federal Reserve’s latest policy announcement.
Although the central bank kept interest rates unchanged, officials signalled that tighter monetary policy could still be required later in 2026.
Hawkish Federal Reserve Pressures Crypto
A growing number of Federal Reserve policymakers are considering another interest rate increase due to persistent inflation risks.
New Fed Chair Kevin Warsh also announced plans to reform how the central bank communicates its future monetary policy decisions. The proposed changes added further uncertainty to financial markets.
Investors began pricing in at least one 25-basis-point rate increase before the end of 2026, according to the CME FedWatch tool.
Higher interest rates generally create difficult conditions for Bitcoin and other speculative assets. They make safer investments, including government debt, more attractive compared with non-yielding cryptocurrencies.
US and Iran Sign Peace Framework
Reports published on Wednesday evening said the United States and Iran had signed a memorandum of understanding aimed at ending their conflict.
The agreement also includes plans to reopen important shipping routes across the Middle East.
The framework creates a path toward further negotiations on a broader and more permanent peace settlement.
Iran’s nuclear programme is expected to become one of the central issues in the upcoming talks. Washington has strongly opposed Tehran’s nuclear ambitions.
Investors Favour AI and Chip Stocks
The U.S.-Iran agreement initially encouraged a broader risk-on move across financial markets.
However, investors primarily directed capital toward artificial intelligence and semiconductor companies with stronger underlying fundamentals.
More speculative markets, including cryptocurrencies and certain metals, received limited support from the development.
This trend has strengthened in recent months and contributed to continued withdrawals from the crypto sector, particularly from spot cryptocurrency exchange-traded funds.
Ethereum and Altcoins Follow Bitcoin Lower
The wider cryptocurrency market declined alongside Bitcoin as optimism surrounding the U.S.-Iran agreement failed to improve sentiment.
Ether, the world’s second-largest cryptocurrency, dropped 3.6% to $1,729.19. XRP fell 4.3%.
Solana, Cardano and BNB recorded losses ranging from 3% to 5%.
Meme coins also moved lower. Dogecoin declined 3.5%, while the Official Trump token fell 2.9%.
The latest market action suggests that cryptocurrency prices may remain under pressure as investors assess the possibility of higher interest rates and continued capital flows toward AI-related stocks.
