 ▲ Bitcoin (BTC)/ChatGPT-generated image |
Bitcoin (BTC) is showing signs of instability, struggling to escape its downward trend even after reclaiming the $68,000 level, as it faces the dual pressures of the Federal Reserve’s outlook for prolonged high interest rates and escalating geopolitical risks originating from the Middle East.
According to financial information outlet Investing.com on February 21 (local time), Bitcoin managed a slight rebound as bargain hunters stepped in following the recent decline. However, market sentiment remains subdued amid interest rate uncertainty and worsening global tensions. Although Bitcoin has attempted to rebound above the $68,000 level for two consecutive days, it remains down about 2.5% on a weekly basis and has declined in five of the past seven weeks. Notably, since the beginning of 2026, Bitcoin has lost approximately 23.6% of its value, reinforcing the view that the overall crypto market’s resilience has weakened sharply.
The biggest source of pressure is concern over the prolonged tightening stance of the U.S. Federal Reserve. Minutes from the January Federal Open Market Committee (FOMC) meeting revealed that several members are even leaving the possibility of further rate hikes on the table to curb inflation, rapidly cooling appetite for speculative assets. While the core Personal Consumption Expenditures (PCE) price index for December rose 3.0% year-over-year, well above the 2% target, fourth-quarter economic growth came in at just 1.4%, falling short of the 2.8% forecast and fueling fears of stagflation.
Geopolitical risks are also weighing on Bitcoin by strengthening demand for safe-haven assets. As military tensions between the United States and Iran reach a peak, investors are favoring the dollar and gold over cryptocurrencies. With President Donald Trump repeatedly mentioning the possibility of military action against Iran and U.S. forces rapidly deploying to the Middle East, funds are flowing out of risk assets like Bitcoin, while gold futures have surged past $5,000 per ounce, continuing a record-breaking rally.
The situation in the altcoin market is even more severe. Ethereum (ETH), the second-largest cryptocurrency by market capitalization, fell 5.5% for the week to around $1,970.84. XRP and BNB posted weekly losses of 5.3% and 1%, respectively. Cardano (ADA), Solana (SOL), and even leading meme coin Dogecoin (DOGE) plunged 9.6%, intensifying downward pressure across the entire market. Investors anticipate that in a high-interest-rate environment, the recovery momentum of altcoins will remain significantly weakened given the liquidity-sensitive nature of cryptocurrencies.
Disclaimer: This article is provided for informational purposes only and should not be construed as investment advice. The publisher is not responsible for any investment losses resulting from reliance on this content.