Why are cryptocurrencies falling? Understand Bitcoin's drop below $65K

By the end of February 2026, the cryptocurrency market experienced one of its most significant corrections, with widespread losses putting investors under pressure. Bitcoin dropped to near $65K, dragging other cryptocurrencies down in a move that revealed major vulnerabilities in market mechanisms. But what exactly caused this sudden decline? The answer involves a combination of macroeconomic factors, leverage dynamics, and rapid shifts in investor sentiment.

The total market capitalization fell approximately 3.5%, reaching $2.25 trillion, while Bitcoin declined over 3%. Ethereum performed even worse, dropping 5%, while Solana suffered one of the largest losses, falling 7%. BNB and XRP also were not spared, retreating 3.7% and 4% respectively. This scenario was not just a single day of unfavorable trading—it was the result of simultaneous shocks in the market.

Trump Tariffs Fuel Fears of Trade War

The initial trigger came from Washington. President Donald Trump announced plans to increase global tariffs from 10% to 15%, citing concerns over the U.S. trade balance. This sudden change reignited fears of an intensified trade war, triggering risk aversion across all high-risk assets.

Bitcoin, historically sensitive to macroeconomic uncertainty, reacted predictably: it fell quickly after the announcement. According to analysts at Crypto Patel, the decline was abrupt, with BTC breaking the $65,000 barrier shortly after the news. The entire market liquidated approximately $461 million in positions, wiping out more than 134,000 traders in a single move. Most of these liquidations involved long positions—traders betting on gains who lost.

Cascading Liquidations: When Leverage Unravels

What made this correction even more severe was the collapse of leverage. Data from the Santiment platform revealed that Bitcoin dropped 4.5% in just two hours, plunging to around $64.2K for the first time since early February. Open interest in Bitcoin futures contracts plummeted dramatically to $19.5 billion—less than half of the 2026 peak, which had reached $38.3 billion.

Liquidations were devastating: over $210 million in Bitcoin positions were forcibly closed within 24 hours, with long positions comprising the vast majority. In just four hours, an additional $193 million in liquidations occurred, including a colossal $61.5 million position on the HTX exchange. When highly leveraged traders have their positions liquidated, the effect is cascading: everyone sells simultaneously, accelerating the fall far beyond what fundamentals would suggest.

Market Sentiment in “Extreme Fear”

As the decline progressed, investor sentiment underwent a radical shift. Santiment pointed out that negative sentiment hit its two-week peak, a particularly notable result considering the event occurred late Sunday night in the U.S., typically a period of low activity on social media and crypto communities.

The Fear & Greed Index, a widely followed metric combining volatility, volume, social sentiment, and Bitcoin dominance data, plunged into “Extreme Fear” territory. This level of widespread panic is rarely seen—and historically, it has marked important turning points.

The Magnitude of the Correction: A First in History

Trading community analyses, particularly from the Bull Theory account, highlighted something extraordinary. Bitcoin had fallen 49% from its peak, wiping out over $1.2 trillion in market value in just 139 days. What makes this historically significant? It’s the first time BTC experienced such a correction in dollar terms without a substantial relief rally recovering part of the gains. This dynamic has many traders questioning whether something structural has changed in the market since the massive liquidation in October.

Where Are the Supports? Technical Perspective

Technically, the situation became critical when Bitcoin lost the support level of $65K. This is an area traders considered fundamental to maintaining the long-term integrity of the trend. Once this support was broken, selling pressure increased significantly, with few technical obstacles until lower levels.

However, the story does not end in permanent decline. Historically, when fear reaches extreme levels and liquidations are so violent, markets often find short-term bottoms. Santiment observed that when retail enters full FUD (Fear, Uncertainty, Doubt) mode, rebounds can occur abruptly.

Market Recovers: Signs of Stabilization

Looking ahead, data from March 25, 2026, shows Bitcoin rebounded to near $70.88K, with a 0.25% increase in the past 24 hours. Ethereum gained 0.99%, Solana rose 0.41%, BNB advanced 0.61%, and XRP showed a slight increase of 0.07%. This recovery suggests that the initial panic has been gradually absorbed by the market.

What’s Next?

The next move for cryptocurrencies will depend on two critical factors: first, whether panic sentiment continues to slow over time; second, whether Bitcoin can establish a new support around $65K–$66K or consolidate at higher levels. The combination of tariff fears, heavy liquidations, and extreme fear created a sharp correction, but recent signals suggest the market may be finding its balance.

Investors should closely monitor macroeconomic developments regarding U.S. tariff policies, as any change on this front could reignite volatility. For now, the clear lesson is: when cryptocurrencies are falling under combined pressure, a recovery often follows—but patience and a clear understanding of the factors causing the initial drop are essential.