Investing.com — slid on Wednesday, as risk assets took it on the chin following a Federal Reserve that expressed great uncertainty over the impact of surging oil prices on inflation and the U.S. economy.
Further escalation in the Middle East conflict and hotter-than-expected U.S. inflation data also weighed on sentiment. The mood was further clouded after a report said crypto exchange Kraken had put its market debut on hold.
Bitcoin dipped 4.5% to $71,004.2 by 18:33 ET (22:33 GMT).
The world’s largest cryptocurrency had climbed close to $76,000 in the prior session.
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Fed says Middle East implications ’uncertain’
The Federal Reserve on Wednesday held interest rates steady, as widely expected. Separately, the Fed’s updated dot plot showed an increase in core PCE inflation projections this year, which chair Jerome Powell said reflected rising oil prices and slow progress on tariffs.
Market participants had hoped that Powell would address the inflationary shock due to the jump in oil prices since the Iran conflict began, with Brent – the global oil benchmark – soaring nearly 50%.
However, Powell largely said that the situation was fluid and that there was no way to know what could happen.
Policymakers “will have to wait and see what happens” in the Middle East and see how “long the current situation lasts,” the Fed chair said.
“I wouldn’t speculate in any way,” Powell added.
Brent tops $110, inflation data comes in hot
Crude prices have rallied as the conflict involving Iran continues to disrupt energy flows, raising concerns that sustained price pressures could delay any policy easing and weigh on risk assets such as cryptocurrencies.
Iran’s semi-official Tasnim News Agency on Wednesday said the Islamic Revolutionary Guard Corps (IRGC) had listed oil and gas targets in Saudi Arabia, the United Arab Emirates, and Qatar and had warned citizens to keep clear of those locations.
The IRGC’s move came after media reports said facilities in Iran’s South Pars field – the largest natural gas field in the world – had been targeted by the Israeli Air Force. Qatar condemned the attack.
Adding another layer of pressure was U.S. producer inflation data published in the morning. February’s Producer Price Index (PPI) rose 0.7%, well above expectations of 0.3% and higher than January’s 0.5%. Core PPI increased 0.5%, also topping forecasts of 0.3%, though easing from the prior month’s 0.8%.
Kraken said to delay IPO
CoinDesk on Wednesday reported that crypto exchange Kraken had put its multibillion-dollar initial public offering on hold, citing two people with knowledge of the matter.
Kraken is still weighing a market debut, but is unlikely to move ahead until market condition improve, CoinDesk said.
Kraken’s parent Payward had filed an IPO registration statement in November last year. At that time, Kraken had raised $800 million in new funding at a $20 billion valuation.
U.S. SEC clarifies crypto classification framework
Meanwhile, regulatory developments grabbed some of the spotlight.
The U.S. Securities and Exchange Commission issued fresh guidance clarifying how cryptocurrencies will be classified, dividing tokens into categories such as digital commodities, stablecoins, and digital securities, with only the latter subject to federal securities laws.
At its core, the SEC’s framework introduces a functional “taxonomy” for digital assets, aimed at distinguishing which tokens fall under securities laws and which do not.
This is a critical issue for markets, as assets deemed securities must comply with strict registration, disclosure, and investor protection requirements.
Crypto price today: altcoins dip
Tracking Bitcoin’s pullback, broader crypto prices also retreated on Wednesday.
World no.2 crypto tumbled 6.1% to $2,188.74.
World no. 3 crypto fell 4.2% to $1.4631.
dipped 5.2%, while dropped 6%.
Among meme tokens, slid 5.7%.
Ayushman Ojha and Vahid Karaahmetovic contributed to this article
