Energy price decline vs. Fed hawkishness: Who will dominate the market pricing logic in the second half of the year?

On June 25, 2026, global capital markets entered a day of intense volatility after experiencing severe turbulence on "Black Tuesday." Bitcoin briefly broke below the psychologically important $60,000 mark during the session, hitting a low of $59,108.6, the lowest since October 2024. Bulls then staged a counterattack, with the price rebounding about 3% from the low to above $61,000. As of June 25, according to Gate market data, Bitcoin was quoted at $61,738.5, down 1.38% in 24 hours, down 7.63% over the past 7 days, and down 10.73% over the past 30 days.

Ethereum came under similar pressure, briefly falling below the $1,600 mark during the session to a low of $1,552.72, before rebounding to $1,648.16, down 1.02% in 24 hours and down 20.92% over the past 30 days. The ETH/BTC exchange rate continued to weaken, reflecting the systemic pressure on mainstream crypto assets under macroeconomic pressure.

The broader crypto market capitalization fell about 4% in 24 hours to $2.06 trillion, with the Fear and Greed Index briefly touching 12 (Extreme Fear).

Meanwhile, international oil prices continued their decline—WTI crude oil futures extended losses to 2%, settling at $68.919 per barrel; Brent crude oil futures fell below $73 per barrel to $72.94 per barrel, the first time since February 27, 2026. The persistent deflation in energy prices, combined with the further tightening stance of the Federal Reserve, is forming a rare macro tug-of-war. Based on the latest market data from June 25, this analysis deconstructs the possible direction of market rhythm in the second half of the year from three dimensions: the driving logic behind the oil price decline, the deeper implications of the Fed's policy path, and their combined effects on crypto assets.

Oil Hits New Lows: From Geopolitical Premium to Accelerated Release of Deflationary Pressure

On June 25, international oil prices continued the sharp decline from the previous trading day. WTI crude oil futures settled at $68.919 per barrel, with losses widening to 2%; Brent crude oil futures settled at $72.94 per barrel, falling more than 1% intraday. By the afternoon session, Brent crude oil futures fell 1.15% to $72.89 per barrel, while WTI futures fell 0.6% to $69.93. Brent crude was down about 42% from its high of $126 per barrel reached on April 30.

The core driver of this oil price decline is the rapid and sustained unwinding of geopolitical risk premiums. The U.S. and Iran reached a 60-day agreement roadmap, with the Strait of Hormuz officially reopened to navigation. U.S. Energy Secretary Wright noted that oil flows through the Strait of Hormuz are now close to pre-war levels. The U.S. has temporarily allowed the purchase of Iranian crude already loaded before the tightening of sanctions, and the market expects oil exports from the Persian Gulf region to continue to recover.

Supply-side recovery is accelerating. Macquarie expects that as supply chains gradually recover and the Strait of Hormuz reopens, oil prices will quickly return to pre-war levels, forecasting average Brent and WTI prices in the third quarter of $67 and $62 per barrel respectively, well below the second quarter averages of $94 and $87. Demand side also exerts pressure—Asian market demand remains sluggish, with Chinese crude oil imports declining since April and local refinery operating rates falling to multi-year lows for the same period.

The macroeconomic implications of falling oil prices go far beyond the energy sector itself. Brent crude has fallen from a conflict-era high of $126 per barrel to below $73, a decline of more than 40%. This magnitude affects asset pricing through two channels: first, by directly lowering inflation expectations; second, by improving profit expectations for non-energy sectors through lower corporate energy costs, while weakening the earnings outlook for the energy sector.

Sustained Sell-off in Energy Sector: Mirror of Deflation Expectations

The continued decline in oil prices has directly transmitted to the stock market. On June 25, the S&P 500 initially closed down 0.2%, with the energy sector falling 1.7% and the technology sector down 0.8%. The Nasdaq 100 initially closed down 0.6%. After the U.S. and Iran reached a temporary agreement to reopen the Strait of Hormuz, the continued decline in oil prices weighed on energy stocks. The coal mining industry overall fell 1.87%, with 24 stocks declining; the energy metals industry fell 2.51%, with 11 stocks declining.

CNBC reported that oversupply fears pulled down oil prices, with the S&P 500 energy sector overall falling about 2%. The compression of refining profits and expectations of slowing performance triggered by international oil price plunges became a clear negative, prompting institutions to fully sell off the energy sector.

The sell-off in the energy sector is not merely a simple mapping of oil prices; it also reflects the market's pricing of the persistence of "energy deflation." When the market begins to believe that oil prices will remain low for an extended period, energy companies' capital expenditure plans, dividend capacity, and valuation logic all require systematic reassessment.

More notably, the energy sector sell-off occurred against the backdrop of a broader market correction. From June 23 to 24, global markets experienced "Black Tuesday"—South Korea's KOSPI plunged nearly 10% triggering a circuit breaker, the Nikkei 225 fell 3.55%, the Hang Seng Tech Index fell 3.30%, the Nasdaq in the U.S. tumbled 2.21%, and the Philadelphia Semiconductor Index plummeted 7.87%. The crypto market weakened in tandem, with Bitcoin breaking below the key support of $60,000. This indicates that the market is not merely undergoing a simple "energy to tech" sector rotation, but rather experiencing a systemic contraction in risk appetite across asset classes.

The Fed's Hawkish Turn: Sustained Suppression of Liquidity Expectations

If the oil price decline is the supply-side story of energy deflation, then the Federal Reserve's policy stance is the dominant variable on the demand side and liquidity front.

The June 2026 FOMC meeting was Fed Chair Warsh's debut. The meeting voted unanimously, 12 to 0, to keep the federal funds rate target range unchanged at 3.50% to 3.75%.

What truly triggered market repricing was the hawkish shift in the dot plot. Among the 18 officials who submitted forecasts, 9 expected at least one rate hike by the end of 2026, with 6 advocating for a cumulative 50 basis points or more. In the March 2026 forecast, no one expected a rate hike this year. The median federal funds rate expectation for the end of 2026 was raised from 3.4% in March to 3.8%, implying one 25-basis-point rate hike this year. The Fed sharply raised its 2026 core PCE inflation forecast from 2.7% to 3.3%, and lowered its GDP growth forecast from 2.4% to 2.2%.

Warsh himself did not submit a dot plot forecast, emphasizing that the dot plot is merely a scenario judgment with an "eraser," not a commitment to future policy path. However, the market has interpreted it as a clear hawkish signal. Fed Chair Powell, in his testimony before the House on June 24, reiterated that there is "no rush to cut rates" and that "tightening will continue if inflation rebounds." According to the CME "FedWatch," the market has priced in a 65.8% probability that the Fed will keep rates unchanged in July, and a 34.2% probability of a cumulative 25-basis-point hike; by September, the probability of a cumulative 25-basis-point hike is 49.7%, and a cumulative 50-basis-point hike is 16.7%. The implied target rate for the December 2026 FOMC meeting in futures markets has risen to 4.05%. The U.S. dollar index stood above 101.8, hitting a 12-month high; the 10-year Treasury yield remained above 4.50%.

The Chief Investment Office of Standard Chartered Wealth Solutions expects the Fed to keep rates unchanged in the second half of the year, with room for one rate cut in the first half of next year. But before that, the crypto market will continue to face pressure in a high-rate environment.

The Clash of Two Forces: Crypto Markets Seek a Bottom Amid Macro Crosswinds

Energy deflation and a hawkish Fed—these two forces have completely different, even contradictory, impacts on crypto assets.

As of June 25, 2026, Bitcoin was quoted at $61,738.5, down 1.38% in 24 hours; Ethereum at $1,648.16, down 1.02% in 24 hours. Bitcoin touched an intraday low of $59,108.6 and a high of $63,221.2; Ethereum touched an intraday low of $1,552.72. Bitcoin's market cap is approximately $1.23 trillion, with a market dominance of 55.42%; Ethereum's market cap is approximately $198.906 billion, with a market dominance of 7.19%.

Bitcoin has retraced more than 50% from its all-time high of $126,193 set in October 2025. Bitcoin has fallen 7.63% over the past 7 days, 10.73% over the past 30 days, and 33.74% over the past year. Ethereum has fallen 7.38% over the past 7 days, 20.92% over the past 30 days, and 31.14% over the past year. Bitcoin's repeated battles around the $60,000 level are essentially a continuous pricing of macro uncertainty.

Leverage structures have amplified downward pressure. During the sharp decline from June 24 to 25, the amount of liquidations across the network continued to climb. CoinGlass data shows that nearly $800 million in crypto long positions were forcibly liquidated in the past 24 hours. The sharp volatility caused the total liquidation amount across the network in the past 24 hours to surge to $653 million, with nearly 140,000 people forcibly liquidated.

Why hasn't energy deflation boosted crypto assets? The answer lies in the Fed's hawkish stance being the more dominant pricing force. After the breakthrough in U.S.-Iran negotiations eased geopolitical risks, the geopolitical risk premium quickly faded, but safe-haven assets did not benefit; instead, they followed risk assets lower. A strong dollar and hawkish monetary policy have increased headwinds for Bitcoin—in a cycle of risk and rate repricing, Bitcoin trades like a non-yielding asset. Gold has declined in tandem with the crypto market, and the "safe-haven narrative" has temporarily failed.

Second Half Rhythm Projection: Who Will Dominate?

Looking ahead to the second half of 2026, the tug-of-war between energy deflation and a hawkish Fed will determine market rhythm, but the weight of the two forces is not fixed.

Scenario 1: Energy deflation deepens. If U.S.-Iran negotiations continue, the Strait of Hormuz remains open, and Persian Gulf oil exports steadily recover, oil prices may further regress to pre-conflict levels. Macquarie forecasts Brent crude average in Q3 will fall to $67. In this scenario, sustained low oil prices will lower inflation data, providing data-driven pressure to revise the Fed's hawkish stance. If inflation declines more than expected, the market may reprice the Fed's policy path—even if the Fed itself has not yet pivoted.

Scenario 2: Geopolitical risks recur. Differences remain between the U.S. and Iran, and negotiations are unlikely to be resolved overnight. The U.S.-Iran technical team will continue negotiations in Switzerland before the end of June. Mine-clearing operations in the Strait of Hormuz still require several weeks to fully normalize. If negotiations hit snags or supply recovery falls short, the geopolitical risk premium will be repriced into oil prices, and the energy deflation logic will quickly reverse.

Scenario 3: Fed policy path revision. The market has already fairly fully priced in the Fed's hawkish stance—the dot plot indicating a possible rate hike this year has been incorporated into expectations. If subsequent economic data (especially inflation and employment data) surprise to the downside, the market may start pricing in the expectation of a "Fed pivot" earlier. Standard Chartered expects the Fed to keep rates unchanged in the second half of the year, with room for cuts in the first half of next year—meaning that near-term easing expectations are unlikely to become the market's main theme.

Conclusion

On June 25, 2026, Bitcoin rebounded resiliently from below $60,000 to $61,738.5, a price level that itself epitomizes the current macro tug-of-war. WTI crude fell below $69, Brent crude retreated below $73, and the structural decline in energy prices is reshaping inflation expectations and industry profit patterns. Meanwhile, the hawkish shift in the Fed's dot plot is continuously tightening financial conditions, with a strong dollar and high-rate environment suppressing risk asset valuations.

These two forces are not a simple zero-sum game; they exert differential impacts across different time scales and asset classes. For crypto market participants, the key is not to judge whether "oil prices fell, so Bitcoin should rise" or "the Fed is hawkish, so Bitcoin should fall," but to understand the relative weight of these two forces at different stages.

Currently, the Fed's policy stance remains the dominant variable—as long as the dot plot points to rate hikes rather than cuts, risk asset valuation expansion lacks a liquidity foundation. Bitcoin's repeated battles around the $60,000 level are essentially a continuous pricing of this macro uncertainty. However, the deepening of energy deflation is laying the groundwork for a potential shift in this landscape—if oil prices fall further in Q3 to the $67 or lower level predicted by Macquarie, the decline in inflation data may eventually shake the Fed's current hawkish consensus.

The core variable for the second-half market rhythm may not be oil prices themselves, but the extent to which the oil price decline translates into a substantial drop in inflation data, and how much that drop can alter the Fed's policy path. Until then, the crypto market will likely continue to search for a bottom under the shadow of macro uncertainty.

FAQ

Q: Why did Bitcoin briefly break below $60,000 on June 25?

Bitcoin broke below $60,000 on June 25 due to a confluence of multiple factors: persistent hawkish expectations from the Fed suppressing risk assets, cascading liquidations on leveraged positions in Asia-Pacific markets, and the spillover effect from the global "Black Tuesday" further exacerbating selling pressure. Bitcoin touched an intraday low of $59,108.6, the lowest since October 2024.

Q: How significant is the U.S.-Iran 60-day temporary authorization for oil markets?

The U.S. and Iran reached a 60-day agreement roadmap, with the Strait of Hormuz officially reopened to navigation. The U.S. Energy Secretary stated that about 20 million barrels of crude had passed through the strait in the past 24 hours. This development is the core driver behind oil prices falling from a conflict-era high of $126 per barrel to below $73.

Q: What is JPMorgan's forecast for oil prices in the second half of the year?

On June 24, JPMorgan lowered its Brent crude outlook, forecasting an average of $86 per barrel in Q3 2026, $80 in Q4 2026, and $78 by the end of 2026. The main reasons are that OECD commercial inventory draws have fallen short of expectations while demand losses have exceeded forecasts. Macquarie's forecast is more pessimistic, seeing Q3 Brent crude averaging potentially as low as $67.

Q: Will the Fed raise or cut rates in the second half of 2026?

The June FOMC dot plot shows the median rate for end-2026 at 3.8%, up 40 basis points from March, with 9 officials expecting at least one rate hike this year. According to CME's "FedWatch," the market prices a 49.7% probability of a cumulative 25-basis-point hike by September. Standard Chartered expects the Fed to keep rates unchanged in the second half.

Q: Does the sell-off in energy stocks mean the market is pricing in a recession?

The S&P 500 energy sector fell 1.7% on June 25, primarily dragged by the continued decline in oil prices. However, the energy sector sell-off occurred amid a broader market correction—both the Nasdaq and S&P 500 have fallen for three consecutive days. This more reflects the unwinding of geopolitical risk premiums and a contraction in risk appetite, rather than a pure recession expectation pricing.