Crypto Market Analysis For This Week: US-Iran Tensions, Fed Rate Cuts, Stocks Crash, and AI Bubble Risks

The crypto market faces a volatile week ahead as the tensions between the US and Iran escalate after new strikes in Kuwait. The recent sell-off across AI and semiconductor chip stocks is also affecting demand for risk assets ahead of the July 28 FOMC decision.

These bearish macro factors are fuelling a risk-off sentiment among crypto traders despite Bitcoin (BTC) holding $64,000 while Ethereum (ETH) is defending $1,800.

Escalating US-Iran Tensions Could Weigh on Crypto Market

The US launched its seventh night of strikes on Iran on July 18. In response, Iran struck a power generation and water desalination plant in Kuwait, according to Kuwait’s Ministry of Electricity, Water and Renewable Energy.

Iraq has now diversified crude exports in response to the US blocking Iranian ports and the Strait of Hormuz.

Still, oil prices continue to climb as the market projects that the war might continue into next week after President Trump said the ceasefire between Iran and the US is over.

These tensions might push the crypto market down as fears grow that US inflation might rise again if the war escalates and push the Fed to increase rate hikes, a move that would reduce demand for risk assets.

Fed Hike Bets Remain High Despite Cooling Inflation

The war between the US and Iran might increase US inflation again like it did in April 2026, and these expectations are now raising the odds that the Federal Reserve is going to increase interest rates.

Analyst Crypto Nobler on X now warns that the Fed will keep interest rates elevated until inflation drops to the Fed’s target of 2%, a move that will weigh on the crypto market.

The Vice Chair of the Federal Reserve, Philip Jefferson, also says that he will support higher rates if inflation does not come down.

Jefferson’s remarks come ahead of the FOMC meeting that will occur on July 28. The CME FedWatch Tool shows that most investors do not expect the Fed to increase rates during this meeting.

Still, this upcoming FOMC could dominate discussions in the crypto market discussions next week as traders speculate on whether the Fed chair will be dovish or hawkish on July 28.

Stock Market Crash Could Spill Over to the Crypto Market

The stock market is dropping, and this is weighing on the crypto market because this drop suggests that investors are taking a risk-off approach.

The Nasdaq-100 index is down by 2.98% in the last five trading days, while the S&P 500 has also dropped by 1.19% in the same period.

The Nikkei 100 is also dropping as Japanese stocks reel from the sell-off that has been seen with semiconductor chip companies like Micron.

The declining stock market prices could continue this week as the Kobeissi Letter warns that corporate investors have sold $77.6 billion in shares in the first half of 2026.

“Insiders are increasingly concerned over geopolitical risks, elevated valuations, and the sustainability of AI spending,” TKL said.

The sell-off could push the crypto market prices lower if the resulting price drop signals that investors are abandoning risk assets.

AI Bubble Risks Weigh on Risk Assets

The BOE Governor, Andrew Bailey, recently warned that there will be an economic fallout if the AI bubble bursts.

His warning comes as the SpaceX stock price drops to $123. This is below the IPO price of $135.

The performance of the SpaceX stock price this coming week might affect how Bitcoin and the crypto market perform. Another decline might suggest that the AI bubble risk is real, and investors might start abandoning risk assets like crypto.

Investors’ exit from AI stocks has also seen Apple topple Nvidia to become the biggest company in the US.

Bitcoin, Ethereum, and XRP Prediction This Week

Bitcoin is up by $1.42% today, to trade at $64,100 at the time of writing. BTC needs to trade above the psychological support of $64,000 to prevent another drop from occurring this week.

Ethereum is also at a make-or-break point at its price of $1,842. A recent CoinGape Ethereum price analysis notes that ETH needs to hold this support at $1,812 to complete a double-bottom pattern that might push it to $2,200.

XRP price has also gained to $1.08 today, July 18, because of whale buying after big wallets purchased 70 million coins in one week.

Bitcoin, Ethereum, and XRP might lead crypto market losses this week if bearish macro factors continue to dominate. But if geopolitical tensions ease and the Fed becomes dovish, the prices might recover.