The recent sharp decline was not an isolated event but the result of multiple factors resonating across macro, geopolitical, liquidity, and market structure domains: a reassessment of Federal Reserve policy expectations (black swan-level impact).

President Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair was interpreted by the market as potentially hawkish or policy path uncertain, leading to a strengthening dollar and lowered rate cut expectations. Risk assets generally came under pressure, with Bitcoin, as a high-beta asset, bearing the brunt. This directly triggered a simultaneous plunge in safe-haven assets like gold (down 9% in a single day) and silver (even worse), as Bitcoin was viewed more as a liquidity source than a safe haven, further amplifying the sell-off.

Geopolitical tensions escalated.
US-Iran relations and Middle East conflicts (such as the Strait of Hormuz) triggered risk aversion. Investors withdrew from risk assets, causing Bitcoin to decline in tandem with stocks and the crypto market. During weekends with poor liquidity, such shocks are often magnified into “flash crashes.”

Leverage liquidations and liquidity exhaustion.
High leverage trading (some platforms support up to 125x) meant small fluctuations could trigger chain reactions of forced liquidations. On a single day in February, over 400,000 accounts were liquidated, with total liquidation amounts reaching billions of dollars, creating a death spiral of “decline → liquidation → more selling.” ETF flows shifted from early net inflows to net outflows (institutions like BlackRock saw hundreds of millions of dollars exit in a single day), with institutional selling intensifying downward pressure.

Narrative collapse and profit-taking.
The “digital gold” narrative was questioned: Bitcoin failed to demonstrate safe-haven properties amid geopolitical conflicts and instead declined alongside risk assets. Long-term holders (OGs) and early profit-takers sold off heavily, combined with weak spot trading volume and stagnation in stablecoin expansion, creating a clear vacuum in buying interest. Institutional demand reversed, with significant net withdrawals from spot ETFs.

Technical factors and derivatives expiry.
Key support levels (such as $70,000 and $65,000) were breached, triggering stop-losses and algorithmic sell orders. Quarterly options expiries (worth hundreds of millions of dollars) often caused volatility. Signals like the March Death Cross (50-day moving average crossing below the 200-day) further fueled panic.

Market structure changes differ from previous bull-bear cycles; this correction involved higher institutional participation but also increased fragility. ETFs became a double-edged sword: initially pushing prices higher, later turning into a source of selling pressure. During retail panic selling, “whales” occasionally bought quietly, but overall liquidity has shrunk compared to the 2025 peak, with market depth insufficient, making small orders capable of causing large shocks.

Looking ahead and short-term risks: prices are expected to fluctuate between $60,000 and $72,000. The key support level is around $65,000 (psychological level + moving average), with a break potentially testing $60,000 or lower; resistance lies at $72,000–$75,000, with a breakout possibly triggering a short squeeze. Geopolitical easing or policy shift signals could lead to a rebound, but leverage remains high, and volatility is significant.

Medium-term: Historically, bear markets last about 12-13 months; if starting from the 2025 high, a bottom may be reached by the end of 2026. Some analysts believe this is a deleveraging and re-pricing process rather than an end of the cycle. If the Fed shifts to easing, ETFs return to net inflows, or positive crypto regulations are implemented, a rebound could restart.

Risk warning: Bitcoin remains highly dependent on macro liquidity and risk appetite. Structural issues like quantum computing threats, regulatory uncertainties, and ongoing institutional outflows could worsen and push prices lower. Conversely, whale accumulation and peak panic indices might signal a local bottom.

Overall, the 2026 Bitcoin crash is a “rebalancing” rather than an apocalypse; the crypto market has historically shown resilience after extreme volatility. However, in a high-leverage environment, short-term chain reactions should still be watched carefully. Investment should be cautious—monitor on-chain data (such as ETF flows, stablecoin supply), macro indicators (Dollar Index, real yields), and geopolitical developments, control positions, and avoid excessive leverage.