Geopolitical risks and macro headwinds resonate: Bitcoin drops below $65,000, U.S. stocks experience the largest monthly decline in a year

On February 28, 2026, the global financial markets’ safe-haven sentiment peaked amid dual pressures from geopolitical tensions and macroeconomic factors. The sudden deterioration of US-Iran relations became a key variable that crushed risk assets: Bitcoin (BTC) fell below $65,000 again after several weeks, while the Nasdaq and S&P 500 recorded their largest monthly declines since March 2025 on the last trading day of February. This was not an isolated market fluctuation but the result of resonance among the global liquidity cycle, geopolitical risk premiums, and tech stock valuation logic. This article will start from the event itself, using timelines, data analysis, and multi-scenario projections to explore the deep structural changes in the current market.

Event Overview: Risk Asset Sell-off Amid Safe-Haven Flows

As of February 28, 2026, global financial markets experienced significant selling pressure on the last trading day of the month. According to Gate data, Bitcoin’s price broke below the $65,000 threshold, with the overall market under downward pressure. Meanwhile, US stocks also performed weakly; the Nasdaq Composite and S&P 500 declined by 3.38% and 0.87% respectively in February, marking their largest monthly drops in nearly a year. The market volatility was directly triggered by escalating US-Iran geopolitical tensions, with multiple governments urging their citizens to leave Iran quickly. Safe-haven sentiment surged, and capital rapidly withdrew from high-volatility assets.

Interplay of Geopolitics and Macro Factors

To understand this market volatility, we need to trace the evolution of macro and geopolitical narratives since mid-February. On February 17, the second round of US-Iran negotiations took place but made no substantive progress. Vice President Vance later stated that the US’s “red lines” had not been recognized by Iran. By late February, the situation became clearer. President Trump publicly expressed dissatisfaction with negotiations with Iran and emphasized that “sometimes” military action is necessary. Although Trump also indicated a preference for peaceful resolution, this ambiguity increased market uncertainty.

Meanwhile, macroeconomic data provided no buffer. On February 27, the US Producer Price Index (PPI) for January rose by 0.5% month-over-month, with core PPI increasing by 0.8%, significantly above market expectations. This data shattered hopes of rapid inflation decline and reinforced expectations that the Federal Reserve would keep interest rates high for longer. Trump’s previous State of the Union did not mention cryptocurrencies nor signal rate cuts, further disappointing market liquidity expectations. The combination of a black swan in geopolitics and a gray rhino in macro data created a “double kill” for risk assets.

Correlations and Divergences During Simultaneous Declines

Data analysis reveals several notable structural features. First, the high correlation between Bitcoin and US tech stocks is reaffirmed. On February 27, Nvidia’s stock continued to decline after earnings, dropping over 4% in a single day, dragging down the entire tech sector. Cryptocurrencies were no exception; Bitcoin fell over 26% in the past month, far exceeding gold’s adjustment during the same period. This synchronicity indicates that, with institutional capital deeply involved, Bitcoin’s pricing logic has increasingly integrated into traditional macro asset frameworks, with its “digital gold” safe-haven attribute being overshadowed by its “high-risk tech growth” nature during liquidity contractions.

Second, internal liquidity divergence intensified. Despite Bitcoin’s price decline, some small-cap tokens showed extreme volatility. For example, tokens like SAHARA surged significantly within 24 hours, while DENT experienced notable drops. This polarization clearly indicates that during sharp risk aversion, capital flows rapidly to both ends: either into short-term narrative-driven speculative assets or panic exits from less liquid altcoins, while mid-tier assets face valuation pressures.

Third, structural signals in capital flows show contradictions. Despite falling prices, US spot Bitcoin ETF inflows remained strong, with about $1.1 billion net inflow during the week—its best weekly performance in months. However, institutional inflows did not fully offset macro pressures; exchange reserves of USDT declined from high levels, approaching the $50 billion mark. Further declines could trigger chain reactions in market liquidity. This suggests that current selling pressure mainly stems from leveraged liquidations of existing positions and macro hedging reductions, rather than pure panic.

Divergent Narratives and Converging Consensus

Current market sentiment revolves around several core debates. First, the attribution of the decline. Some argue that geopolitical tensions are the direct trigger, with safe-haven flows pushing capital from Bitcoin into gold and US Treasuries—10-year yields briefly fell below 4%, and gold surged past $5,200/oz. Others emphasize systemic macro liquidity constraints, noting that persistent inflation and delayed rate cuts are systematically revaluing high-volatility assets’ discount rates.

Second, the debate over Bitcoin’s asset nature. Professor Liu Jin of Yangtze Business School points out that Bitcoin’s correlation with the Nasdaq is high, and it should be viewed as a tech asset, with most investors having a tech background. This aligns with Ned Davis Research strategists, who suggest that if the bear market deepens, Bitcoin could fall further toward $31,000. Conversely, some argue that short-term volatility should not be overinterpreted; the market structure of Bitcoin is undergoing long-term change, with institutional participation gradually altering its behavior.

Rethinking Safe-Haven Logic

A key narrative to revisit in this decline is whether Bitcoin remains an effective safe-haven asset. Data shows otherwise. During the US-Iran escalation, gold and silver saw significant capital inflows and price gains, while Bitcoin and US stocks declined in tandem. This indicates that, in current market perception, Bitcoin is not regarded as equivalent to gold in safe-haven status. The underlying reason is that Bitcoin’s investor base overlaps heavily with tech stocks; during risk events, these investors tend to reduce high-volatility holdings to meet liquidity needs rather than hold it as a store of value.

This narrative dislocation reveals a structural contradiction in the crypto market’s mature phase: on one hand, institutionalization accelerates, and mainstream acceptance increases; on the other, this acceptance comes at the expense of “safe-haven independence.” Bitcoin is becoming a ripple within the global liquidity tide rather than a safe harbor outside of it.

From Narrative-Driven to Macro-Driven Markets

The long-term impact on the crypto industry is reflected in shifts in pricing power and focus. As spot ETFs and other compliant channels develop, institutional behavior increasingly drives market rhythm. When risk budgets shrink, institutions tend to reduce positions simultaneously, amplifying volatility. This means future price discovery in crypto will be more driven by macro factors such as Federal Reserve policies, US inflation data, and geopolitical risk premiums, rather than solely by technological innovation or application narratives.

For practitioners, this implies that risk management frameworks must be upgraded. Monitoring macro liquidity, assessing leverage levels dynamically, and quantifying correlations with traditional assets have become as important as technological innovation. Future market cycles may no longer be simply alternating between altcoin seasons and Bitcoin halving rallies but will mirror global macro cycles within the crypto space.

Multi-Scenario Evolution and Projections

Based on current facts and logic, three potential future market paths are outlined:

Scenario 1: Limited Geopolitical Escalation (Baseline)

If US-Iran tensions remain at “diplomatic pressure and military deterrence” levels without large-scale conflict, market sentiment will gradually recover. In this scenario, focus will shift back to Fed policy and inflation data. Bitcoin is likely to oscillate between $60,000 and $70,000, awaiting further macro signals in March. Altcoins will continue to diverge; assets lacking real-world utility may face ongoing liquidity drain.

Scenario 2: Significant Conflict Escalation (Risk Scenario)

If the situation escalates into localized military conflict, oil prices could surge, further boosting inflation expectations and forcing the Fed to maintain tighter policies. Risk assets would face valuation and earnings headwinds. Bitcoin could fall below $60,000, seeking support around $55,000 or lower. ETF capital flows might reverse, creating negative feedback loops.

Scenario 3: Rapid Diplomatic Resolution (Optimistic)

If diplomatic breakthroughs occur and geopolitical risk premiums quickly dissipate, markets could see a rebound. However, given inflation pressures, the rebound may be limited. Bitcoin might challenge resistance above $70,000, but retesting all-time highs would require substantial macro liquidity improvement.

Conclusion

Bitcoin breaking below $65,000 and the Nasdaq and S&P 500 experiencing their largest monthly declines in nearly a year reflect the market’s response to geopolitical uncertainty and macro tightening. For the crypto industry, this reaffirms that it has become part of the global financial system, sharing the same liquidity and risk appetite cycles. Recognizing this is the starting point for managing current volatility and for future trend analysis. As market sentiment gradually stabilizes, the real structural test begins: in a macro-driven era, crypto assets need to find new narrative anchors that align with the evolving macro environment.