With the focus falling firmly on oil and gold markets in recent weeks, it's been easy to lose track of the latest developments on the crypto market. After Bitcoin hit a five-month losing streak in February, fevered talk of another "crypto winter" began to circulate. From its October 2025 all-time high of $126,210.50, BTC eventually lost over 50% of its value in two major drawdowns, briefly hitting a local low of $60,074.20 on 5 February 2026. Since then, the recovery has been encouraging, although not totally convincing as of yet. Bitcoin climbed 2.2% in March, which marked its first monthly gain since September. That sent a signal to retail and institutional investors alike that the worst might now be behind the original cryptocurrency.
But more interesting, perhaps, than the decline in BTC is what its development reveals about the crypto market today. It's no coincidence that the crash began as tensions in the Middle East and South America worsened, with each leg down coming at major flashpoints, such as the abduction of Maduro and the war with Iran. It would seem then that Bitcoin is acting more and more like just another growth stock as opposed to a unique asset class of its own. However, as is always the case, the truth is a little more complex than that. In this piece, we'll try to explain how macroeconomic factors and liquidity have faced off against more traditional crypto market forces to lead to the current situation, and where we might be headed from here.
Neither one nor the other
After over a decade as a standalone asset class with its own largely speculative and meme-based boom and bust cycles, crypto has gradually developed into a "proper" investment vehicle. In addition to the massive influx of liquidity this has brought in the form of institutional investment via ETFs and the like, it has also had the effect of making Bitcoin just as sensitive to geopolitical, liquidity-based and macroeconomic forces as similar risk-on assets, such as equities. Despite originally presenting itself as a digital alternative to gold, Bitcoin has become much more like a high-Alpha tech stock than digital bullion. As we've already touched upon, the big drops in price coincided perfectly with escalations in geopolitical conflicts, and this most recent recovery up to between $68,000 and $72,000 came after data revealed US inflation was down to within touching distance of the Fed's target at 2.4% in January. This was surely informed by the market's expectations of rate cuts by Trump's new man at the Fed, Kevin Warsh, which will only intensify now that the lower price pressure allows for more monetary flexibility.
The CME's FedWatch tool currently has the likelihood of no change at over 90% right the way up to the summer, but a lot can change in a month, and markets will surely be watching Warsh's first post-meeting comments in May. The weaker dollar is also helping to inflate Bitcoin's nominal value, since this is expressed in USD. In the current context of de-dollarisation and potentially lower interest rates in the medium term, it's hard to see how this positive factor for the BTC price will reverse. However, so much of how the Bitcoin price develops will now depend on external factors, US foreign and domestic monetary policy chief among them. BTC is still lagging behind stocks on rallies, but its broad motions are clearly more aligned with equities than ever before.
A turning point
As we covered above, institutional demand for Bitcoin has been one of the key driving forces behind its evolution from a speculative meme asset to a respected instrument, and so it's no surprise that this recent price stabilisation is tied to a return to net ETF inflows. After months of net outflows, inflows returned around mid-March when around $700 million was reinvested in one week. This pace has been maintained since then, and total net inflows for the past three weeks stand at around $2.1 billion. Even more encouraging is the fact that the institutional market continues to expand, with Morgan Stanley set to launch its own spot ETF soon and Franklin Templeton targeting its Franklin Crypto option directly at previously unexposed pension funds. Also important to note is the post-halving supply dynamics still in play from April 2024. Supply has slowed significantly, and mining cost prices are currently around $80,000 per BTC (and that's without any rapid increases in energy prices caused by war).
This wasn't a problem in 2025 when prices averaged $100,000 or more, but now it's becoming increasingly important. Some miners have been forced to sell for operational reasons, but this relatively high cost of production means that normal market forces will eventually push prices up at least above this cost-price level, and the turning point could easily be now, given the stabilisation we've seen. Market sentiment is clearly reversing after a period of extreme fear. As the geopolitical headwinds start to weaken, the conditions for growth will become all the more apparent. Most overleveraged or overly sensitive participants have already been shaken out of the market, and what we have left are a combination of whales, savvy retail HODLERs, and professional investors attempting to buy the dip. Much will depend on what we see in the coming weeks, but the technical data points towards a bottom already having been reached.
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