Rising oil and gas prices have pushed up inflation expectations, prompting markets to scale back bets on Federal Reserve rate cuts. Traders now see nearly a 40% chance that rates will remain unchanged this year, up sharply from under 3% earlier.

Bitcoin BTC $67,482.86 may have already priced in tighter monetary policy, leaving equities more exposed to macro shocks, according to asset manager Bitwise. The cryptocurrency has slipped below $70,000, down more than 23.7% year-to-date.

Geopolitical tensions, particularly the U.S.-Iran conflict near the Strait of Hormuz, have driven energy prices higher, pressuring inflation expectations. On prediction markets like Polymarket and Kalshi, the likelihood of Fed rate cuts has fallen sharply.

“Energy prices remain closely tied to inflation expectations,” said Luke Deans, senior research associate at Bitwise. “The recent surge has shifted market expectations from anticipated rate cuts to potential tightening.”

Equities have started to react, with the S&P 500 down nearly 8% over the past month. By contrast, bitcoin has been drifting lower since October 2025, reflecting its early sensitivity to liquidity and risk appetite. The Mayer Multiple, which compares BTC’s price to its 200-day average, has stayed in the lower historical percentiles since January, indicating a broad reset in expectations.

“Assets that have already undergone valuation compression tend to show lower downside risk,” Deans noted, “while markets trading near cyclical highs remain more vulnerable to negative macro shocks.”

Within crypto, bitcoin’s dominance has strengthened, creating a market largely driven by BTC’s price and rising correlations across altcoins.