Bitcoin ends Q1 2026 with its worst quarterly performance since 2018 as war, tariffs and a hawkish Fed weigh on risk assets

Bitcoin posted its worst quarterly performance since 2018, falling about 22% as war developments, tariffs, and a hawkish Federal Reserve weighed on risk assets. The cryptocurrency ended the first quarter of 2026 down nearly a quarter from its February levels, according to data cited by institutional trading firm Talos, using information from its financial intelligence arm, Coin Metrics.

Q1 2026 decline and price range

Bitcoin fell from around $95,000 in February to roughly $66,700 by quarter-end, a decline of about 22% year-to-date. Talos said losses reached as much as 34.6% at the quarter’s lowest point.

By the end of the quarter, Bitcoin was largely pinned in a $66,000–$70,000 range. Wintermute said whale transfers were at multi-year lows and that there was no meaningful bid defending key levels.

Risk-off pressure and investor caution

Talos attributed the weak performance to a macro-driven reset rather than a structural change. Samar Sen, head of international markets at Talos, said crypto and other risk assets came under pressure after the escalation of the Iran conflict, alongside tariffs and tighter expectations for monetary policy.

Wintermute added that institutions and retail investors alike were “sitting on the sidelines,” unwilling to commit capital until they see regulatory clarity or a shift in geopolitical conditions.

How Bitcoin compared with other assets

After the February 28 outbreak of the Iran war, Bitcoin held up better than equities and gold. Over the same period, Bitcoin fell about 1.5%, compared with a 17% drop in gold, a 7.6% decline in the Nasdaq, and a 7.4% slide in the S&P 500, according to Talos data.

ETF flows and market liquidity

Sen said U.S. spot Bitcoin ETFs hold roughly $100 billion in assets and that net inflows resumed in March, suggesting institutional demand has continued despite the drawdown.

He also noted that liquidity across order books has recovered from late-2025 lows, enabling markets to “absorb larger moves” and keeping market structure “holding up more consistently” than in previous cycles.

What could drive the next quarter

Zeus Research analyst Dominick John said U.S. monetary policy is likely the most important near-term variable for Bitcoin. He told Decrypt that a Fed pause or easing would “release liquidity, lift risk appetite, and help stabilize Bitcoin,” while continued hawkishness could tighten liquidity and increase selling pressure.

Ryan Yoon, senior analyst at Tiger Research, said resolution of the Middle East conflict could act as a “critical catalyst” for the next quarter. He added that the Fed’s stance on rate cuts would be the “definitive watershed” for either a rebound or further declines.

Market-implied expectations

On prediction market Myriad, owned by Decrypt’s parent company Dastan, users assigned a 5% chance to the Fed cutting rates by more than 25 basis points in the first half of the year.

Myriad users were also pessimistic about near-term Iran-related developments, with the chance of a U.S./Iran ceasefire before June falling from 58% at the start of the week to 39% at the time of reporting. The chance of U.S. boots on the ground before May rose from 57% to 87% over the same timeframe.

Geopolitical divergence and potential longer-term demand

Markus Levin, co-founder of decentralized data network XYO, said a “growing regional divergence” could shape Bitcoin’s trajectory, pointing to constrained access to global financial systems in Iran.

He said Bitcoin usage has historically increased during periods of economic pressure and is likely to rise if the conflict persists. Levin added that while such demand may not offset macro forces in the short term, it could eventually push Bitcoin to behave more like a neutral reserve asset closer to gold.

At press time, Bitcoin was trading around $66,830, flat on the day, according to CoinGecko data.