Bitcoin under pressure from high interest rates and Israel-Iran tensions, analysts say

• Bitcoin retreats on Fed interest rates and geopolitical tension
• Cryptocurrencies await interest rate cut in the second half of the year
• Crypto ETF flows could resume on monetary easing

Expectations that the Federal Reserve will keep interest rates unchanged and rising tensions between Israel and Iran are having a direct impact on the cryptocurrency market. Bitcoin, which fell below $103.000 after airstrikes in the Middle East, remains under pressure as investors assess developments in monetary policy and the geopolitical situation.

Hawkish Fed outlook, Israel-Iran tensions weigh on crypto as rebound hopes hinge on H2: analysts https://t.co/TX3vhkgkl4

— Crypto Brothers (@LosKruptos) June 18, 2025

Valentin Fournier, chief analyst at BRN, warned that the lack of rate cuts and the geopolitical impasse are contributing to the market’s short-term weakness. “The combination of aggressive rate outlook, slowing ETF flows and rising geopolitical risk has turned the short-term momentum negative,” Fournier said.

Furthermore, futures indicate the Fed is likely to make only one or two rate cuts in 2025, down from previous forecasts of three or four. Tariff-driven inflation also raises the perception that the central bank may maintain a tight stance for longer, limiting appetite for risk assets like cryptocurrencies.

Despite the recent pullbacks, some experts still maintain an optimistic outlook for the second half of the year. Matt Mena, crypto research strategist at 21Shares, believes that a potential interest rate cut in September — which the market estimates has a 65% chance — could revive institutional interest in crypto ETFs. “With venture funding hitting a three-year high, institutional participation is accelerating,” he said.

Mena also highlighted the record $7,5 trillion in money market funds, which could be redirected to digital assets if yields start to fall. He said this would create a more favorable environment for Bitcoin and other cryptos in the second half of the year.

Meanwhile, BTC options contracts remain close to all-time highs, indicating that investors remain positioned and attentive to potential macroeconomic triggers.