Bitcoin's (BTC) price has retreated to the $68,000 support level, erasing recent gains and facing a growing risk of falling further to $65,000 in March. The cryptocurrency recently hit a six-week high of $76,000, recovering $13,000 since the escalation of Middle East tensions, only to face a sharp $8,000 rejection from that peak.
Macroeconomic pressures are a primary driver of the decline. Despite no change in rates at its latest meeting, Federal Reserve Chair Jerome Powell's hawkish remarks on inflation have pressured risk assets. Powell indicated rate cuts may not occur for over a year, creating market uncertainty. Analysts warn that rising oil prices and inflation could even lead to potential rate hikes later in 2026, reversing earlier expectations of cuts. The 10-year Treasury yield has jumped approximately 40 basis points since the Middle East conflict began.
Geopolitical instability is exacerbating Bitcoin's volatility. Escalating U.S.-Iran tensions, including threats from former President Donald Trump regarding the Strait of Hormuz, have caused sharp, brief price dips. Bitcoin is behaving as a classic risk-on asset, reacting swiftly to global political unrest.
Institutional sentiment appears to be cooling. After a strong seven-day streak of positive inflows, spot Bitcoin ETFs saw a reversal, with over $300 million in withdrawals across three days. This shift coincided directly with Bitcoin's price correction.
Market metrics and sentiment point to further potential downside. Bitcoin lost about $121 million in leveraged long positions in 24 hours, adding downward pressure. Trading volume has dropped 26% to $25.99 billion daily, indicating declining buying pressure and a cautious trader approach. On prediction market Polymarket, the odds of Bitcoin dropping to $65K in March have climbed to 48%, while the chances of a rally to higher targets remain below 15%. The Net Unrealized Profit and Loss (NUPL) indicator suggests a full market cycle bottom has not yet been reached, with some analysts warning the price could still dip to the $45,000–$50,000 range before stabilizing.
