Crypto Drops 2% as Iran Deal Nears; Traders Eye Fed

Total crypto market capitalization fell roughly 2% to $2.21 trillion on Tuesday. The drop came as reports said a U.S.-Iran agreement is moving closer to completion.

According to a BBC report, U.S. officials released details of a proposed memorandum that would extend the ceasefire between Washington and Tehran and reopen key shipping routes through the Strait of Hormuz. President Donald Trump told the G7 summit the deal could be signed as soon as the next day. Vice President JD Vance is expected to attend the signing ceremony.

The memorandum links economic benefits for Iran to compliance with agreed conditions. It centers on restoring access through the Strait of Hormuz, a critical chokepoint for global oil supply.

Digital assets stayed under pressure despite those headlines. Bitcoin and Ethereum traded lower, along with most major cryptocurrencies. The crypto market instead turned its focus to the Federal Reserve, where monetary policy uncertainty continues to weigh on risk appetite.

The Fed left its benchmark rate unchanged at 3.50% to 3.75% at the June 17 meeting. The unanimous decision matched market expectations. Investors remain uncertain about what the hold means for the months ahead. Attention has shifted to Fed Chair Kevin Warsh's first post-meeting press conference. Traders are seeking guidance on inflation and the possibility of tighter monetary policy later this year.

Borrowing costs remain elevated. Inflation is still above the 2% target. Under these conditions, risk assets across the board have struggled to attract sustained inflows, some analysts have said.

Elevated rates reduce the appeal of speculative assets like cryptocurrencies. Stablecoin yields also rise with rates, giving traders a risk-free alternative. That dynamic has muted the impact of positive geopolitical news.

The market's reaction to the Iran deal is no exception. Earlier in the week, crypto prices recovered after Trump confirmed he would pursue the peace plan. Falling oil prices and lower geopolitical risk briefly lifted sentiment across several financial markets. That bounce faded quickly.

The proposed memorandum still requires formal approval and implementation. The deal is not yet signed. That leaves room for unexpected developments before the agreement takes effect. Until the Fed provides clearer guidance on rates, traders appear unwilling to treat the advancing deal as a catalyst for a sustained rally.

A finalized agreement could lower oil prices further and ease inflation pressure. The market has not yet priced that outcome. The next concrete event is Warsh's press conference, scheduled for later this week. Any change in the Fed's stance on inflation or borrowing costs could shift the calculus for risk assets.