Bitcoin has recently endured its most significant quarterly downturn since 2018, with a steep decline of approximately 22%. This drop comes amidst broader geopolitical tensions, notably following the outbreak of war in Iran, which has stirred concerns across risk markets globally.
As of the end of the first quarter of 2026, Bitcoin’s valuation plummeted from around $95,000 in February to approximately $66,700, marking a substantial year-to-date loss. Institutional trading firm Talos reported that losses at one point reached 34.6%, signaling robust pressure on the cryptocurrency amidst factors like rising tariffs and a hawkish Federal Reserve.
Despite these challenges, Bitcoin’s performance remained relatively resilient compared to traditional assets. Following the onset of the Iran conflict on February 28, it experienced a mere 1.5% drop, significantly outperforming gold, which fell by 17%, and both the Nasdaq and S&P 500 indices, which saw reductions of 7.6% and 7.4%, respectively. This suggests that while Bitcoin suffered, it was not as severely impacted as other risk assets during this turbulent period.
Analysts suggest that the changes in the marketplace may reflect more of a macroeconomic reset rather than a fundamental decline. Samar Sen, head of international markets at Talos, noted that cryptocurrencies, like other risk assets, are responding to the elevated tensions from the Iran conflict and the resulting economic policies.
Institutional interest in Bitcoin appears to have remained steadfast, with U.S. spot Bitcoin ETFs managing roughly $100 billion in assets and witnessing net inflows as recently as March. This indicates a willingness from institutions to engage with the cryptocurrency market, even amid recent downturns. Sen emphasized that rising liquidity and improved market structure have allowed for greater flexibility in absorbing fluctuations.
Looking forward, analysts view U.S. monetary policy as critical to Bitcoin’s near-term prospects. Dominick John from Zeus Research pointed out that any pause or easing from the Federal Reserve could inject liquidity into the market, potentially boosting risk appetite and stabilizing Bitcoin values. Conversely, persistently hawkish policies could tighten liquidity and enhance selling pressures.
Moreover, the resolution of the conflict in the Middle East is anticipated to be a significant catalyst for Bitcoin’s trajectory in the coming quarter. Opinions diverge on potential outcomes, with prediction markets reflecting a mere 5% chance of the Fed cutting rates by more than 25 basis points in the first half of the year. Pessimism surrounds the Iran situation, as expectations for a ceasefire have sharply dropped, while concerns about U.S. military involvement have surged.
Additional insights from Markus Levin, co-founder of the decentralized data network XYO, suggest that Bitcoin may gain traction in markets facing economic strains, potentially evolving toward a status akin to that of a neutral reserve asset similar to gold over time.
At present, Bitcoin’s trading value hovers around $66,830, showing little change on the day, highlighting the uncertainty and volatility that characterize the current crypto landscape.
