In the first quarter of 2026, the price of the leading cryptocurrency fell by 22.2%. This marks the worst start for the asset in the past eight years.
Bitcoin closed on March 31 at $66,619, according to Yahoo Finance. In comparison, it was trading at $87,508 on January 1. The only larger decline at the beginning of the year occurred eight years ago when the asset plummeted by 50% — from $14,112 to $6,973.
This current drop continues the trend from the fourth quarter of 2025, when Bitcoin lost 23%, falling from $114,057 to $87,508. Thus, over the last six months, the first cryptocurrency has decreased by more than 40%.
Quarterly Bitcoin Dynamics. Source: CoinGlass.
Reasons for the Correction
The pullback from historical highs is largely attributed to geopolitical uncertainty due to the escalation of conflict in the Middle East. Rising tensions have dampened investor sentiment in both the crypto industry and traditional financial markets.
In addition to macroeconomic factors, the decline was exacerbated by outflows from U.S. spot Bitcoin ETFs. Andri Fauzan Adzima, head of research at Bitrue, noted that the situation is worsened by persistently high inflation, the Federal Reserve's cautious policy, and a general risk-off sentiment in the markets.
According to SoSoValue, net outflows from spot funds in the first quarter amounted to $496.5 million. A March inflow of $1.32 billion only partially offset the losses of the first two months, which totaled $1.8 billion.
Monthly Inflows and Outflows from ETFs. Source: SoSoValue.
Long-Term Confidence Remains
Despite the challenging global economic situation and unstable ETF inflows, analysts believe that investor confidence in Bitcoin's long-term prospects remains strong.
“Institutional participation and adoption trends remain unchanged. This indicates more of a cyclical movement rather than a fundamental shift,” said Min Jung, an analyst at Presto Research.
She believes that for a turnaround in the downward trend in the second quarter, the market needs more macroeconomic clarity, particularly regarding the situation in the Middle East.
Previously, Donald Trump stated that the conflict with Iran could end in two to three weeks even without a deal. Meanwhile, Iran continues to attack neighboring Persian Gulf states. President Biden is expected to address the nation in prime time on the evening of April 1 to discuss the operation's progress.
“For a trend reversal in the second quarter, a renewed inflow of funds into ETFs, clear progress in regulating the crypto industry in the U.S., and a shift towards a more accommodative monetary policy will be necessary,” said Nick Rack, research director at LVRG, in a comment to The Block.
At the time of writing, Bitcoin is trading around $68,800. Over the past 24 hours, the asset has risen by 2.9%, according to CoinGecko.
Notably, analysts at JPMorgan recognized Bitcoin as the main safe-haven asset amid the war in Iran.