According to CoinDesk, Bitcoin has tumbled approximately 22% in the first quarter of 2026, following a 25% decline during the final three months of 2025. This represents the longest recorded stretch of underperformance against U.S. equities, with the Crypto Fear & Greed Index dropping 10 points in under a week and now sitting just three points away from 'extreme' fear territory. As reported by CoinDesk, Mark Connors, founder of Risk Dimensions, noted that "That's never happened," pointing to data showing Bitcoin lagging stocks consistently since early October. The trend has raised fresh questions about whether the asset is behaving more like a risk trade than a hedge, with the Crypto Fear & Greed Index at 16.92, indicating extreme fear and RSI at 52.47 suggesting a neutral market position despite the broader bearish trend.
As reported by AMBCrypto, the Federal Reserve has dramatically shifted its monetary policy expectations, with 51% probability of a rate hike by March 2027 according to The Kobeissi Letter. This represents a sharp sentiment flip from just four weeks ago, when the Fed was not pricing in rate cuts until December 2027. The policy shift is driven by concerns that U.S. CPI inflation could climb toward 3.5%, roughly 150 basis points above the Fed's long-run target, as oil and gas prices surge. This inflationary environment is challenging crypto's traditional role as an inflation hedge. According to Reuters, markets are now pricing in a roughly 25% chance for a hike of at least 25 basis points at the Fed's October meeting, with money market participants not pricing in any easing from the U.S. Federal Reserve this year.
Despite the weak quarter, Bitcoin held up better in March than many expected, rising about 1% in March while gold fell 11% over the same period, as reported by CoinDesk. The early March escalation between the U.S. and Iran sent shockwaves through global markets, driving oil prices and the U.S. dollar higher as investors reacted to supply risks and rising costs. However, Bitcoin did not experience the same level of forced unwinding as gold, with around 21,700 BTC from short-term holders flowing onto exchanges over the past 24 hours, all sold at a loss, indicating panic-driven selling pressure. This stability is attributed to earlier liquidations that cleared out leveraged positions and Bitcoin's ability to move quickly across borders, limiting forced selling compared with physical assets.
Recent data reveals significant institutional and sovereign activity in the crypto market. According to CryptoQuant, Strategy purchased about 45,000 BTC over the past 30 days, while all other digital asset treasury companies combined bought around 1,000 BTC. Strategy now holds roughly 76% of all bitcoin owned by treasury companies, underscoring how reliant the narrative is on a single buyer. This concentration weakens the case for broad corporate adoption and raises concerns about the durability of treasury-driven demand in challenging market conditions. Meanwhile, Bhutan's government transferred another 519.7 BTC worth about $36.8 million, bringing its total crypto outflows in 2026 to more than $152 million. Its bitcoin holdings have fallen from a peak of roughly 13,000 BTC in late 2024 to about 4,453 BTC today, a decline of nearly 66%.
Technical analysis suggests the current correction may have further to run, with Ecoinometrics estimating it could take approximately 300 days for Bitcoin to recover to its previous all-time high. For every additional 10% decline from a peak, the recovery period extends by an average of 80 days, according to this model. Short-term forecasts predict a 2.96% increase over the next seven days, though the long-term outlook remains tied to broader macroeconomic conditions. Looking ahead, CoinDesk analyst Mark Connors pointed to Bitcoin's extended stretch of underperformance relative to equities as a factor that could shape what comes next, noting that rolling 63-day data shows the asset has lagged the S&P 500 since October - the longest such period on record. If this pattern holds, Bitcoin could be entering a phase where relative weakness gives way to renewed demand, particularly as macro pressures tied to debt and currency expansion continue to build.
