NEW YORK — Bitcoin extended a punishing multi-day retreat on Tuesday, February 24, 2026, tumbling more than 5% to breach the $63,000 threshold as traders confronted a simultaneous escalation of U.S. trade policy and growing fears of military confrontation in the Middle East. The world's largest cryptocurrency by market capitalization touched an intraday low of $62,964.64 on Coinbase spot markets before recovering marginally, but the session's damage underscored how thoroughly macroeconomic headlines have displaced crypto-specific narratives as the dominant driver of Bitcoin's price. Since the start of 2026, the asset has shed approximately 24% of its value, erasing gains accumulated in the final months of the prior year and prompting a broad reassessment of how the asset behaves during periods of acute financial stress.

The Supreme Court Ruling That Set Off a Chain Reaction

The current sell-off has roots in a legal and political sequence that began four days before Tuesday's session. On Friday, February 20, the United States Supreme Court issued a ruling that struck down the executive branch's invocation of emergency powers to impose sweeping global tariffs, providing markets with brief relief that evaporated almost immediately. Over the following 24 hours, the administration announced it would instead invoke Section 122 of the Trade Act of 1974, a statutory mechanism that permits the imposition of tariffs for balance-of-payments purposes, to raise the global import levy from 10% to 15% with immediate effect. The announcement, published Saturday, February 22, caught the market mid-weekend and generated a sharp reaction when Asian trading sessions opened on Monday, with a second and deeper wave of selling arriving as North American markets picked up on Tuesday.

The policy pivot reignited concerns that tariffs at the elevated 15% rate would feed directly into consumer price indices, complicating the Federal Reserve's trajectory on interest rates. Higher-for-longer monetary policy weighs on speculative assets by raising the opportunity cost of holding non-yielding instruments, and Bitcoin in its spot form generates no cash flow and carries no yield. When investors anticipate rates remaining elevated, the discounted value of a future speculative gain diminishes, reducing near-term demand. The market's reaction to the tariff escalation aligned closely with that framework, as capital rotated out of digital assets and into traditional safe havens. Gold extended its year-to-date advance, and U.S. Treasury markets attracted inflows even as equity futures registered mixed results across major indices.

Analysts were broadly aligned in characterizing Tuesday's decline as a cyclical repositioning rather than any development unique to the cryptocurrency industry. The phrase deployed most consistently across institutional commentary was "tactical de-risking," a term describing short-term reductions in exposure to high-beta assets during episodes of elevated uncertainty, undertaken without abandoning a longer-term investment thesis. High-beta assets, by definition, amplify the directional moves of broader risk markets; when sentiment deteriorates, they tend to fall faster and further than more defensive holdings. Invesco's head of client investment solutions for Asia Pacific excluding Japan described the day's price action as looking less like a crypto-specific shock and more like a classic risk-sentiment reset, attributing the plunge to tactical repositioning rather than a fundamental reassessment of Bitcoin's long-term value.

The severity of the move was amplified by the mechanics of leveraged derivatives markets. Futures open interest, the total notional value of outstanding contracts on Bitcoin, has contracted sharply throughout 2026, falling from a peak exceeding $95 billion in the prior year to approximately $40 billion as of the most recently available data. A declining open interest figure during a price decline typically indicates that market participants are closing positions rather than initiating aggressive new short bets, which is consistent with deleveraging rather than directional speculation. However, when leveraged long positions unwind, whether by choice or through automated margin calls, they create cascading spot-market selling pressure. That dynamic played out on Tuesday: more than $460 million in long positions were forcibly liquidated within a 24-hour window, compressing prices well beyond what underlying sentiment alone might have produced. The Crypto Fear and Greed Index, a composite sentiment gauge, fell to a reading of 14, a level last associated with the prolonged bear market conditions of 2022.

Iran Risk Amplifies the Macro Overhang

Trade policy was not the only weight on risk appetite. The prospect of U.S. military action against Iran added a distinct and independent layer of uncertainty to Tuesday's session. The prior week, the U.S. president stated publicly that a decision on whether to conduct a military strike against Iran could come within approximately ten days, citing Tehran's resistance to the framework of a proposed new nuclear agreement. Markets across multiple asset classes have historically treated elevated Middle East tensions as a trigger for reduced risk tolerance, particularly when the potential for energy supply disruption or broader geopolitical contagion is perceived to be material. The convergence of an active trade war escalation and the prospect of military conflict in a strategically critical region created a dual-headline environment that proved difficult for risk-sensitive assets to navigate in any orderly way.

The resulting pressure distributed broadly across the digital asset complex. Ethereum, the second-largest cryptocurrency by market capitalization, fell more than 5% on the session, dropping below the $1,900 level. Solana declined approximately 5%, while Bitcoin Cash shed roughly 7%. The total global cryptocurrency market capitalization fell to approximately $2.28 trillion, a contraction of several hundred billion dollars over a period of days. Within derivatives markets, funding rates on Ethereum and Solana turned negative, a signal indicating that the overall leverage in those markets was being reduced rather than accumulated, and consistent with a market that was shedding risk rather than building new directional bets.

ETF Flows and On-Chain Signals Paint a Bearish Near-Term Picture

The spot price decline on Tuesday did not occur in isolation. It arrived after five consecutive weeks of net outflows from U.S.-listed spot Bitcoin exchange-traded funds, a streak that had by that point erased approximately $4.5 billion in assets from those vehicles. Spot Bitcoin ETFs, which launched in the United States in early 2024, channel institutional and retail capital directly into the spot market; sustained redemptions from these products remove a significant source of buy-side pressure that had been a structural support for prices throughout much of 2024 and 2025. Digital asset investment products broadly recorded $288 million in net outflows in the most recent weekly reporting period, with Bitcoin funds accounting for the majority of that figure, and the outflow streak representing the longest consecutive weekly withdrawal sequence since the spot ETFs first launched.

On-chain data offered additional texture about the selling dynamic. The exchange whale ratio, a metric tracking the proportion of large Bitcoin transfers to exchanges relative to total inflows and commonly used as a proxy for large-holder selling activity, rose to its highest level since 2015 in the days immediately preceding Tuesday's intraday low. A high reading on that metric typically signals that entities with substantial Bitcoin holdings are moving assets to trading platforms in preparation for sales. Glassnode's seven-day moving average of Bitcoin's net realized profit and loss, which measures whether coins are being sold at a gain or at a loss, registered approximately negative $480 million as of February 23, indicating that sellers were, on average, booking losses. That figure, while improved from the negative $1.24 billion single-day low recorded on February 6, continued to indicate that the market remained in a sell-side dominant regime.

Regulatory Ambiguity as a Structural Undercurrent

Against the backdrop of immediate price pressure, a longer-running uncertainty continued to shape the industry's structural risk environment. The Digital Asset Market Clarity Act, known informally as the CLARITY Act, which would formally delineate jurisdiction between the Commodity Futures Trading Commission and the Securities and Exchange Commission over digital assets and establish clear statutory definitions for which tokens qualify as commodities versus securities, remained pending in the Senate. Its continued delay has maintained an environment of regulatory ambiguity that discourages certain institutional allocators from taking concentrated positions in an asset class where the rules governing trading, custody, and disclosure have not been fully resolved. Market participants have observed a pattern in which institutional capital managers reduce exposure ahead of major regulatory decisions, contributing to a "sell first, ask questions later" dynamic during periods when the policy outlook is unclear.

The combination of macro headwinds, geopolitical uncertainty, forced liquidations, persistent ETF outflows, and unresolved regulatory questions left participants navigating a compressed risk environment as February 24 drew to a close. Some contrarian observers noted that the extreme sentiment readings, compressed futures open interest, and historically elevated exchange whale ratio could collectively indicate late-stage signs of a deleveraging cycle approaching exhaustion rather than the start of a deeper structural breakdown. Standard Chartered analysts had previously identified $50,000 as a potential extended downside scenario if current support levels failed to hold, while other market participants continued to monitor the $60,000 level, a threshold Bitcoin tested briefly on February 6, as the next meaningful floor should macro conditions continue to deteriorate.

Written by Nick Ravenshade for NENC Media Group, original article and analysis.