Shares of IBIT plunged 4.7% to $40.27 in after-hours trading Wednesday as the Federal Reserve's hawkish tone collided with a war-driven oil shock, forcing investors to ask whether the largest Bitcoin ETF's recent rally was built on borrowed time.
• Powell Told Markets the Inflation Fight Isn't Over — and Oil Makes It Harder. The Fed said it expects to cut rates just once in 2026, with officials projecting hotter inflation this year than previously forecast.
The Fed's inflation outlook for 2026 was raised to 2.7%, up from December's 2.5% projection.
Powell acknowledged the Fed is making "not as much" progress on inflation as it had hoped, adding that "if we don't see that progress, you won't see that rate cut." For IBIT holders, fewer cuts mean higher borrowing costs stick around longer, which drains money from speculative assets like Bitcoin into safer, yield-bearing investments like bonds.
• A Geopolitical Oil Shock Is Doing What Tariffs Alone Couldn't. Brent crude surpassed $100 per barrel on March 8 for the first time in four years, rising to $126 at its peak.
February's producer price index — a measure of wholesale inflation — came in at 0.7%, more than double the 0.3% expected.
Iranian attacks on vessels passing through the Strait of Hormuz have "dramatically reduced traffic" in the channel carrying 20% of global oil and gas supplies. Rising energy costs feed directly into consumer prices, giving the Fed less room to ease — the exact policy pivot IBIT needs to reignite demand.
• Institutional Inflows Were Just Heating Up — Now They Face a Stress Test. The week of March 9–13 produced $767 million in total Bitcoin ETF inflows, with IBIT absorbing 78% — roughly $601 million.
Total net assets across all U.S. Bitcoin ETFs climbed to $95.77 billion. But large asset managers now drive flows, and their decisions follow Fed signals directly — a single day of outflows exceeding $200 million post-Powell would be an alarm signal.
IBIT has already fallen 22.6% in 2026 , and Bitcoin sits 42% below its October record of ~$126,000.
• The Leadership Vacuum Adds Another Layer of Risk. Powell's term ends in May, and Trump has tapped former Fed Governor Kevin Warsh as successor.
Seven officials now see no cuts at all this year, up from four in December — a split that could widen under new leadership. For IBIT, policy uncertainty is price uncertainty, magnified by Bitcoin's habit of moving in lockstep with stocks: the 30-day correlation between Bitcoin and the S&P 500 stands at 0.55.
The bottom line: IBIT's fate rests on whether $100+ oil forces the Fed to stay tight or whether a worsening jobs market forces its hand. Until that tension resolves, the ETF is caught in the crossfire.