Wall Street ended lower Thursday and Bitcoin followed, dropping to $73,000 as escalating Middle East tensions rattled global markets. The slide came as investors began pricing in higher inflation risks tied to the conflict — and the possibility that the Federal Reserve will have a harder time cutting rates.
Stocks take a hit
The major indexes all closed in the red. The S&P 500 and Nasdaq both fell more than 1% on the session. Defensive sectors like utilities and consumer staples held up better, while energy stocks gained as crude prices spiked. The broader move was a clear rotation away from risk.
Bitcoin's $73,000 level
Bitcoin touched $73,000 during Thursday's session, down from levels above $75,000 earlier this week. The drop mirrored the equity selloff as traders unwound risk exposure. Bitcoin has traded increasingly in sync with stocks this year, and Thursday was no exception. The question now is whether the $73,000 level will hold if the geopolitical situation worsens over the coming days.
Inflation fears and the Fed
Escalating tensions in the Middle East have direct implications for energy prices, and that's feeding through to inflation expectations. Higher oil means higher costs for transport and production — the kind of persistent inflation the Fed has struggled to contain. Any further jump could delay the central bank's rate-cutting timeline, which markets have been banking on for the second half of 2026. The Fed's next policy meeting is approaching, and this week's events have thrown those expectations into doubt.
Where investors are heading
The risk-off mood is prompting a defensive shift. Bond yields fell as money moved into Treasuries. Gold, a traditional safe-haven, edged higher. Crypto investors are watching closely — a sustained risk-off move could push Bitcoin lower, but some see it as a long-term hedge against currency debasement. For now, the trend is caution.
All eyes now turn to any diplomatic efforts over the weekend. A ceasefire or de-escalation could reverse the risk-off trade; further escalation may push Bitcoin below $73,000 and deepen the stock selloff.
