Bitcoin fell 2.7% over the past 24 hours to $72,878.67 on May 28, unable to capitalize on positive market reactions to U.S.-Iran ceasefire negotiations and gains in traditional markets. The Nasdaq rose 0.6% and crude oil climbed to $90 per barrel as traders responded to news of a draft 60-day memorandum of understanding between U.S. and Iranian negotiators, but crypto markets remained under sustained pressure.
The divergence underscores a deeper concern: inflation data released in April showed the Personal Consumption Expenditure Index, the Federal Reserve’s preferred gauge, reached 3.8% year over year, up sharply from 2.8% in February and marking the highest level in three years. The spike has complicated the outlook for monetary policy under Federal Reserve Chair Kevin Warsh.
Olu Sonola, Head of U.S. Economics at Fitch Ratings, said the situation has left policymakers in a bind. “The inflation picture is becoming increasingly uncomfortable for the Fed. This is not just a headline inflation problem: core inflation is moving the wrong way too,” Sonola said. “Price pressures are likely to persist over the next few months, and while the Fed cannot fix a supply shock, it cannot ignore one that is feeding into underlying inflation. The Fed is stuck — and the heat is clearly being turned up.”
The ceasefire agreement, which President Donald Trump has yet to approve, followed overnight U.S. airstrikes on an Iranian military site near the Strait of Hormuz. Treasury Secretary Scott Bessent signaled a hardline stance on any disruption to shipping through the critical energy corridor. “The U.S. will not tolerate any attempt to impose tolls on shipping through the Strait of Hormuz,” Bessent said. “Oman, in particular, should know that the U.S. Treasury will aggressively target any actors involved, directly or indirectly, in facilitating tolls for the Strait and any willing partners will be penalized.”
Control of the Strait of Hormuz has dominated macro traders’ attention in recent months due to its role as a critical energy shipping route. Yet despite the de-escalation signal from the draft agreement, bitcoin failed to sustain a break above $73,000, a level that has resisted repeated attempts.
JPMorgan attributed the weakness in crypto to a broader cooling of the pandemic-era “debasement trade,” which had centered on bitcoin and subsequently gold as inflation hedges. The bank reported recent outflows from bitcoin and gold exchange-traded funds alongside reduced institutional futures positions, suggesting waning conviction among large investors that crypto assets will outperform in an inflationary environment.
The combination of persistent price pressures and geopolitical uncertainty has created a backdrop in which traditional safe havens like bonds and crude oil are attracting capital, while crypto markets struggle to find a compelling narrative. Bitcoin’s inability to rally on dovish geopolitical news signals that inflation concerns are now the dominant driver of crypto sentiment.
