Cryptocurrencies sharply tumbled on Wednesday as rising geopolitical risks captivated investors' attention after the conclusion of the July Federal Reserve meeting.

Bitcoin {{BTC}} dropped to $64,500 from around the $66,500 level where it traded following Federal Reserve Chair Jerome Powell's press conference, and was down more than 2% over the past 24 hours. Altcoin majors including ether {{ETH}}, solana {{SOL}}, Avalanche's AVAX {{AVAX}} and Cardano {{ADA}} also declined, while Ripple's XRP saved some of the gains from earlier today. The broad-market crypto benchmark CoinDesk 20 Index was 0.8% lower than 24 hours ago.

The sell-off happened as the New York Times reported that Iran's leaders ordered retaliation against Israel for killing Hamas leader Ismail Haniyeh in Tehran, increasing risks of a broader conflict in the region.

Earlier today, the Fed left benchmark interest rates unchanged and gave little indication that a widely expected rate cut in September is guaranteed. Fed's Powell said that while no decisions have been made about a September cut, the "broad sense is that we're moving closer" to reducing rates.

While digital assets suffered losses, most traditional asset classes climbed higher during the day. The 10-year U.S. bond yields fell 10 basis points, while gold was up 1.5% to $2,450, slightly below its record-highs and WTI crude oil prices surged 5%. Equities also soared during the day, with the tech-heavy Nasdaq 100 index rebounding 3% and the S&P 500 closing the session 2.2% higher, led by chipmaker giant Nvidia's (NVDA) 12% gains.

The differing performances between asset classes could be due to traders' positioning prior to the Fed meeting, Zach Pandl, head of research at Grayscale, said in an emailed note.

"Equities may have been slightly under-owned after the recent drawdown, while bitcoin is coming off a strong period with solid inflows, whereas gold rallied after a period of weakness," he said.

"Bigger picture, the combination of Fed rate cuts, bipartisan focus on crypto policy issues, and the prospect of a second Trump Administration may advocate for a weaker U.S. dollar should be considered very positive for bitcoin," he concluded.

UPDATE (July 31, 2024, 21:30 UTC): Adds Grayscale commentary.