Bitcoin has experienced its most significant quarterly decline since 2018, plummeting approximately 22%. Despite this downturn, the cryptocurrency managed to outperform both equities and gold following the onset of the Iran conflict. Analysts attribute key factors for Q2’s performance to Federal Reserve policies and potential resolutions in the Middle East.
The first quarter of 2026 saw Bitcoin close with a notable drop, losing nearly a quarter of its value amid geopolitical tensions, tariffs, and a stringent stance from the Federal Reserve affecting risk assets. The price fell from around $95,000 in February to about $66,700 by the end of March—a year-to-date decrease of roughly 22%, as reported by institutional trading firm Talos using data from Coin Metrics. At one point during this period, losses reached as high as 34.6%.
Currently, Bitcoin is trapped within a range between $66,000 and $70,000 with whale transactions at multi-year lows and no substantial buying interest supporting these levels according to research shared by Wintermute with Decrypt.
Both institutional players and retail investors are reportedly hesitant to invest until there is more clarity regarding regulations or changes in geopolitical circumstances.
Even though it faced challenges during this quarter, Bitcoin fared better than traditional markets post-February 28 when war broke out in Iran; it only dropped by about 1.5%, contrasting sharply with gold’s fall of 17%, along with declines seen in Nasdaq (7.6%) and S&P 500 (7.4%), based on Talos data.
Samar Sen from Talos remarked that Bitcoin’s quarterly performance seems more like a “macro-driven reset rather than an essential structural change.”
“The escalation surrounding Iran led crypto—and other risk assets—to face increased pressure alongside tariffs and expectations for tighter monetary policy,” he noted.
The U.S.-based spot Bitcoin ETFs currently manage around $100 billion worth of assets which saw net inflows resume in March—indicating that institutional interest remains resilient despite recent downturns.
Liquidity across trading platforms has also rebounded since late-2025 lows enabling markets to “absorb larger fluctuations,” while market structures appear more stable compared to previous cycles.
“Periods marked by macroeconomic uncertainty typically dampen risk appetite but also heighten focus on effective risk management strategies,” he stated while noting ongoing engagement from institutions under these conditions.
Aiming for Stability
The trajectory for Bitcoin over the near term may heavily depend on U.S. monetary policy decisions according to Dominick John at Zeus Research who explained that if the Fed pauses or eases rates it could “inject liquidity into markets,” thereby boosting risk tolerance which would stabilize Bitcoin prices; conversely continued hawkishness might restrict liquidity further exacerbating selling pressures.”
A resolution concerning ongoing conflicts within the Middle East could act as an essential catalyst moving forward into next quarter—with any indications regarding rate cuts potentially serving as pivotal points determining whether we see significant recovery or further declines,” Ryan Yoon from Tiger Research conveyed his insights via Decrypt.
User predictions on Myriad—a platform owned by Dastan which is also affiliated with Decrypt, indicate just a mere five percent likelihood that rates will be cut beyond twenty-five basis points during H1 this year—showing user skepticism towards developments surrounding both Fed actions & Iranian conflict where chances for ceasefire have notably decreased over recent days dropping down significantly while anticipation grows regarding possible military involvement before May arrives.”
A noticeable “regional divergence” among various markets including Iran where access remains limited could influence how bitcoin evolves moving forward according Markus Levin co-founder XYO decentralized network who shared insights stating: “Historically bitcoin usage tends rise amidst economic distress likely increasing again should hostilities continue.” He added: “While such demand may not counterbalance global macro forces immediately overtime we can expect shifts toward behaving akin neutral reserve asset much like gold.”
As per CoinGecko data available at press time bitcoin was trading approximately around sixty-six thousand eight hundred thirty dollars remaining unchanged throughout day’s activity.”