Bitcoin declined on Thursday, giving back much of its recent gains as hawkish signals from the Federal Reserve prompted investors to increase expectations of an interest rate hike later this year.
The signing of a U.S.-Iran peace agreement provided little support for cryptocurrency markets, with digital assets continuing to underperform compared with technology and artificial intelligence-related stocks.
The world’s largest cryptocurrency fell 0.56 percent to $64,085 by 10:09 GMT.
Investors see at least one rate hike in 2026
Bitcoin came under pressure in overnight trading after the Federal Reserve kept interest rates unchanged, in line with market expectations. However, the central bank’s latest meeting revealed that a growing number of policymakers are considering a rate increase later in 2026 due to persistent inflation risks.
Federal Reserve Chair Kevin Warsh also hinted at changes to the Fed’s communication strategy on monetary policy, adding to uncertainty across financial markets.
According to CME FedWatch data, investors are now pricing in at least one 25-basis-point rate hike by the end of 2026.
Higher interest rates are generally viewed as a headwind for cryptocurrencies and other speculative assets, as they increase the attractiveness of lower-risk investments such as bonds and other fixed-income securities.
U.S.-Iran deal drives rally in AI-related equities
On Wednesday, the United States and Iran remotely signed a memorandum of understanding aimed at ending their conflict and restoring access to critical shipping routes across the Middle East.
The preliminary agreement lays the groundwork for further negotiations between the two countries toward a broader and more permanent peace deal. A key focus of the upcoming talks will be Iran’s nuclear program, which has long been a major point of contention for Washington.
The announcement fueled a risk-on rally across global markets, although investors largely favored artificial intelligence and semiconductor stocks with stronger earnings prospects and fundamentals over more speculative assets such as Bitcoin and precious metals.
The shift toward AI-related equities has accelerated in recent months, contributing to sustained capital outflows from the crypto market, particularly from spot exchange-traded funds (ETFs), as investors seek exposure to sectors perceived to offer stronger growth potential and lower volatility.
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Ether falls to $1,741.57
The broader cryptocurrency market moved lower alongside Bitcoin, finding little support from the easing of geopolitical tensions between the United States and Iran.
Ether, the world’s second-largest cryptocurrency, dropped 1.44 percent to $1,741.57, while XRP declined 1.96 percent to $1.1723.
Other major cryptos also recorded losses, with Solana, Cardano, and BNB falling between 1.10 percent and 2.18 percent as risk appetite in the crypto sector remained subdued.
Among memecoins, Dogecoin slipped 1.58 percent, while the $TRUMP token lost 0.80 percent, extending a broader selloff across speculative digital assets.
