Bitcoin drops below $65,000: A comprehensive analysis of the macro pressures behind the weekend correction and the liquidity contraction of stablecoins

Cryptocurrency markets faced headwinds on the last trading day of February 2026. After briefly touching the $70,000 level, Bitcoin (BTC) prices quickly retreated. As of February 28, according to Gate data, BTC has adjusted to $63,771.6, down 5.69% in 24 hours. Ethereum (ETH) fell below $1,900, at $1,861.04, while Solana (SOL) dropped to $78.53. Market sentiment shifted from optimism to caution. This correction was not an isolated event; it was driven by a combination of unexpectedly strong U.S. macroeconomic data, negative chain reactions following tech giants’ earnings reports, and internal crypto market liquidity shrinkage of stablecoins. This article aims to analyze the causes, impacts, and potential future developments of this market volatility through structured analysis and logical reasoning.

Weekend Correction: Starting from the Brief Touch of $70,000

On Wednesday, buoyed by continuous capital inflows into spot ETFs, Bitcoin approached the $70,000 mark, fueling bullish sentiment. However, this upward momentum lasted less than 48 hours. By Friday and the weekend trading sessions, market sentiment abruptly shifted, and Bitcoin prices began to decline steadily. According to Gate data, BTC briefly dipped to $63,030.4 intraday, before closing at $63,771.6, erasing more than half of this week’s gains.

Mainstream assets like ETH and SOL experienced more significant declines. ETH fell 3.56% over 24 hours, while SOL plummeted 10.09%. XRP was not spared, dropping 6.87% to $1.31 within 24 hours. This clearly indicates that the decline was systemic, reflecting a broad risk appetite contraction rather than isolated asset-specific issues.

Macro Transmission and On-Chain Signals: Dual Drivers of the Correction

This market correction was not triggered by a black swan event within the crypto space but resulted from the interplay of external macroeconomic factors and internal liquidity structures.

Cross-Market Risk Sentiment Transmission

• Fact: The latest U.S. Producer Price Index (PPI) rose 0.5% month-over-month, exceeding expectations. This data heightened inflation concerns and dampened expectations for Fed rate cuts in the near term.
• Fact: As a result, major U.S. stock indices closed lower on Friday. The S&P 500 declined 0.4%, and the Nasdaq 100 fell 0.3%. Leading tech stocks like NVIDIA continued to face pressure after earnings, dropping 4.2% in a single day.
• Viewpoint: As high-risk, highly sensitive global trading assets, crypto prices tend to correlate strongly with tech stocks represented by the Nasdaq. When macro data triggers inflation fears and causes risk asset sell-offs, investors often reduce crypto exposure simultaneously to lower overall portfolio risk.

Why Did ETF Inflows Fail to Support?

• Fact: This week, U.S. spot Bitcoin ETFs experienced strong capital inflows, with a total net inflow of $1.1 billion over three days, marking the best weekly performance in months.
• Analysis: This is a typical tug-of-war between macro narratives and micro capital flows. While ETF inflows provided solid buying support, macro headwinds proved more powerful. Data shows traders prefer locking in profits or reducing positions amid macro uncertainty, and leveraged liquidations further accelerated price declines.
• Hypothesis: Persistent and steady ETF inflows indicate long-term institutional demand remains. However, in the short term, market pricing is dominated by active traders highly sensitive to macro data. Therefore, macroeconomic signals currently outweigh ETF capital inflows in influencing prices.

From “AI Replacing Humans” to “Large Investors Exiting”

• Mainstream View 1: AI Anxiety Spillover. Events like Block Inc.'s mass layoffs have sparked widespread fears of AI replacing human jobs on a large scale. This anxiety extends from employment concerns to consumer expectations, ultimately dampening risk appetite.
• Mainstream View 2: Stablecoin Reserves Dwindling. Data from on-chain analytics firm CryptoQuant shows that exchange-held USDT reserves have fallen from $6 billion to $5.11 billion over the past two months.
  • Viewpoint: Stablecoins are the “ammunition” of the crypto market. Continuous decline in exchange reserves suggests market purchasing power is depleting. If reserves fall below $5 billion, it could trigger a liquidity crisis and widespread sell-offs.
• Controversy: Some interpret the reserve decline as a positive sign of investors withdrawing funds to cold wallets for long-term holding; others see it as a sign of capital exiting the market, indicating risk aversion. Given current price declines, the latter explanation appears more convincing.
• Fact Evidence: Large ETH holders are showing signs of capitulation. On-chain data indicates that prominent entity ETHZilla has officially abandoned its accumulation strategy and shifted toward tokenized real-world assets (RWA), with its ETH holdings at a loss.

Confirmation of Range-Bound Volatility and Market Structural Fragility

This correction further consolidates the broad trading range of $60,000 to $70,000 for Bitcoin, established since its crash on February 5. Resistance above $70,000 remains strong.

Meanwhile, altcoins have shown greater fragility during this decline. ETH, SOL, and XRP all experienced larger drops than BTC, reflecting that during macro uncertainty, funds tend to flow out of higher-risk, smaller-cap assets and into Bitcoin, the most consensus-driven asset—so-called “flight to quality.” SOL’s over 10% drop within 24 hours also indicates that its previous meme coin hype and ecosystem activity “alpha gains” have been fully erased.

Multi-Scenario Evolution and Logical Deduction

Based on current facts, we can project possible future market trajectories:

• Scenario 1: Testing the Lower Bound Again
  • Logic: Macro pressures are unlikely to ease in the short term; USDT reserves continue to decline without reversal.
  • Projection: Bitcoin will likely continue oscillating within the current range, with a significant chance of testing the $60,000 support level again. ETH and SOL will follow BTC’s trend, but volatility may increase.
• Scenario 2: Macro Sentiment Recovery and Rebound
  • Logic: Panic is typically a short-term reaction. If upcoming economic data shows easing or the Fed signals dovishness, markets may stabilize.
  • Projection: Once macro risk appetite improves, abundant ETF inflows and short-squeezes could trigger a swift rebound from the range bottom. ETH and SOL, which experienced deeper declines, may see stronger technical rebounds.
• Scenario 3: Liquidity Crisis Triggers Breakdown
  • Logic: If CryptoQuant’s warning about USDT reserves falling below $5 billion materializes.
  • Projection: Accelerated reserve declines could break the fragile supply-demand balance, with $60,000 support under severe threat. A breakdown could trigger widespread stop-losses and leveraged liquidations, causing prices to fall rapidly to the next support levels. This scenario depends on macro risks and internal liquidity depletion resonating.

Conclusion

Bitcoin’s retreat from the $70,000 level exemplifies a typical price revaluation driven by macro risk transmission to the crypto market. It reminds us that despite the growing size of the crypto ecosystem, it remains vulnerable to global macro liquidity and risk appetite shifts. The $60,000–$70,000 range has become the main battleground for bulls and bears. For investors, short-term volatility is notable, but more important is monitoring the validity of range boundaries and key liquidity indicators like USDT exchange reserves. Until the trend clarifies, fact-based structured analysis and risk management are far more valuable than predictions of a one-sided market.