Bitcoin’s price dropped further on Wednesday as traders digested hotter-than-expected US inflation data and awaited the Federal Reserve’s rate policy decision.

Over the past day, the coin has dropped by nearly 4%, and was recently priced at $71,622, according to CoinGecko. Ethereum dropped further — nosediving by 6% — and was priced at $2,181.

The selloff comes after the biggest coin started flirting with $76,000 last week — its highest level in over a month. Analysts believed it was decoupling from risk assets as stocks took a hit.

But investors continued to derisk Wednesday as inflation data came in worse than expected and the war in Iran escalated, with US equities and crypto both taking a hit.

James Butterfill, head of research at European asset manager CoinShares, told DL News that the fall in prices could be due to fears over what the Fed will say at the Federal Open Market Committee meeting.

“I have seen the futures market rate cut expectations for June fall further, suggesting forward guidance from the Fed will be quite hawkish given rising oil prices,” he added.

Rising oil prices to hurt Bitcoin

Oil prices continued to climb Wednesday on news that Israel had hit Iran’s South Pars gas field.

Experts previously told DL News that rising energy prices lead to higher inflation, in turn postponing interest rate cuts from central banks. Crypto markets have typically performed better in a low interest rate environment.

Now, with war raging in the Middle East, oil prices could continue to rocket up. Last week, Iran’s military spokesman warned oil prices could double due to the war.

All eyes on the Fed

Now, traders will be eyeing up what Fed Chair Jerome Powell says following the meeting on Wednesday.

Marex’s crypto trading analyst, Louis De Backer, and co-head of crypto trading, Samuel Leyne, wrote in a note to DL News that the dip in crypto prices was likely down to traders positioning ahead of the event.

“The Fed decision is still ahead, so part of this is also pre-event positioning and profit taking rather than a reaction to the Fed itself,” they wrote.

Fed officials are expected to hold rates steady in the second meeting of 2026, but any signs from Powell after the meeting that the central bank may raise interest rates later in the year could lead to a shift in the market.

Mathew Di Salvo is a news correspondent with DL News. Got a tip? Email at mdisalvo@dlnews.com.