Bitcoin BTC$71,159.38 slipped below $71,000 on Wednesday as Federal Reserve Chair Jerome Powell flagged rising oil prices amid the war in Iran as a new inflation risk.

The Fed held interest rates steady as expected, but during his post-meeting press conference, Powell acknowledged that the recent surge in energy prices is already feeding into the central bank’s outlook.

"The oil shock for sure shows up" in higher inflation projections, he said, while cautioning that "nobody knows" yet how persistent the impact will be.

Policymakers raised their 2026 inflation forecast to 2.7% from 2.4%, underscoring concerns that price pressures could remain elevated longer than anticipated.

Despite that, Powell dismissed comparisons to a 1970s-style stagflation, even as the central bank faces growing tension between slowing growth and sticky inflation.

"That’s not the case right now," he said, noting that unemployment remains near long-run norms while inflation is only modestly above target. "I would reserve the term stagflation for a much more serious set of circumstances."

"What we have is some tension between the goals, and we’re trying to manage our way through it," he added.

Cautious markets

Already under pressure prior to the Fed news on poor February inflation data and no sign the war in Iran is letting up, markets fell further late in the session.

Bitcoin BTC$71,159.38 late Wednesday afternoon had pulled all the way back to $70,900, down almost 5% over the past 24 hours. Ether (ETH) was sporting a 6.5% decline.

The S&P 500 and Nasdaq closed at the day's lows, down 1.4% and 1.5%, respectively. Gold extended its decline below $4,850 an ounce, now 3.1% lower on the day at its weakest price in more than a month.

Digital asset-related stocks remained sharply lower, following crypto prices. Strategy (MSTR), the largest corporate BTC holder, and Bitmine (BMNR), the leading Ethereum treasury firm, were 5%-6% lower. Investment firm Galaxy (GLXY) declined almost 7%, while crypto exchange Gemini (GEMI) tumbled 15% to about its lowest level since it went public last year.