calm bitcoin Price action in the $74,000 area was shattered on Wednesday morning on reports of a military escalation in Iran and then February inflation data that came in much stronger than expected.
The declines began when US President Donald Trump adopted a more aggressive tone toward Iran, suggesting further escalation in a series of Truth Social posts and calling the country the “NUMBER ONE STATE SPONSOR OF TERROR.”
Additionally, Iranian state television reported that part of that country’s South Pars gas field was attacked.
This followed reports that Israel killed Iran’s Intelligence Minister Esmail Khatib, while the United States deployed 5,000-pound bunker-buster bombs against missile sites near the Strait of Hormuz, a key route for global oil flows.
That news combined to send the price of WTI crude oil from as low as $92 per barrel overnight to nearly $96.
Minutes later, the US producer price index for February rose 0.7% versus just 0.3% expected and up from 0.5% in January. The core PPI rose 0.5% versus the expected 0.3%, although below the 0.8% in January. It is important to note that the disturbing inflation data predates the attacks on Iran and the subsequent sharp rise in oil prices.
The data complicates the prospects for rate cuts, especially with oil prices still elevated, and is weighing on risk assets ahead of the US stock market open.
Bitcoin has now fallen to $72,300, down 2% in the last 24 hours. Ether (ETH), solana (SOL), and XRP (XRP) declines are closer to 3%. US stock index futures have swung from solid gains to declines of around 0.4% across the board.
The Federal Reserve arrives later
Later in the day, the U.S. Federal Reserve is widely expected to keep rates steady, shifting attention to Chairman Jerome Powell’s messaging and how policymakers interpret the recent mix of risks to growth and inflationary pressures. Trump once again renewed calls for rate cuts in a Wednesday post, adding a political dimension to the meeting.
