It has been a grinding few months for crypto. Bitcoin peaked at $126,198 in October 2025, Ethereum hit $4,953 the following month, and then, almost methodically, both assets spent the better part of Q1 2026 giving those gains back.
The recovery attempt currently underway isn’t exactly thunderous, but given everything the market has absorbed since February, it’s arguably more noteworthy than the price numbers alone suggest.
At the time of writing, Bitcoin is holding near the $70,000 mark, at a current price of $69,453, while Ethereum is currently trading around $2,146, both assets sitting well below their 2025 highs but showing signs of stabilization after a quarter that dealt with the market one external shock after another.
A quarter shaped by the Iran conflict
The single biggest weight on crypto in Q1 2026 was the war. The joint US-Israeli military operation against Iran, which began on Feb. 28, 2026, created the most significant geopolitical shock to financial markets since Russia’s invasion of Ukraine in 2022.
When news broke that Saturday, Bitcoin immediately dropped to roughly $63,000, triggering over $300 million in leveraged liquidations across centralized exchanges. The timing made it worse, traditional markets were closed, leaving crypto as the only large liquid asset available for panic selling.
In a primetime address on April 2, President Trump vowed to strike Iran “extremely hard” in the coming weeks, sending fresh shockwaves through global markets. By the morning of April 3, Bitcoin plummeted to $66,000 region.
Ethereum fell 5 percent and BNB declined 6.8 percent, as the prospect of an escalated conflict around the Strait of Hormuz, effectively closed since mid-March, spooked even the most committed institutional investors. Spot Bitcoin ETFs saw $174 million in net outflows on Wednesday alone.
The oil price dimension mattered too. The Iran war has driven the steepest increase in oil-price forecasts in recent memory, with analysts now expecting Brent to average $82.85 a barrel in 2026, up from $63.85 in February.
Brent and US crude have both gained about 60 percent since the conflict began, a move that fed directly into inflation worries and rate repricing across global markets. Every time rate cut expectations got pushed further out, risk assets, crypto included, felt it.
During the March 19 selloff, Bitcoin showed an 89 percent correlation with the S&P 500 and 95 percent with gold. Every major escalation in the conflict happened on a weekend, when stocks, bonds, and commodity markets were all closed.
Crypto, trading 24/7, absorbed the full initial shock each time before traditional markets could react on Monday. That dynamic likely amplified the magnitude of each drawdown.
What’s driving the rebound
The partial recovery underway appears tied to a shift in war-related sentiment more than anything fundamental in crypto itself. When Trump signaled the operation was ahead of schedule and hinted at a potential end to hostilities, Bitcoin staged a sharp recovery, climbing back into the $69,000 range.
Ethereum and Solana gained alongside it. Bitcoin price started April back above $68,000 after a late-March relief rally tied to hopes that the Iran conflict could move toward de-escalation, gaining more than 2% in the past 24 hours to reach as high as $70,065 before retreating.
Bitcoin spot ETFs reported significant inflows toward the end of March. According to data from SoSoValue, total net inflows stood at $118 million on March 31. Two Ethereum spot ETFs also drew new capital in the same trading session. That’s a notable reversal from February, which saw approximately $3.8 billion in net outflows from Bitcoin ETFs.
On the Ethereum side, there’s a developing fundamental narrative feeding into sentiment. Ethereum developers have finalized the scope for the Glamsterdam upgrade, scheduled for the first half of 2026.
The hard fork is expected to deliver a 78.6 percent reduction in fees for smart contract calls, introduce parallel transaction processing, and increase the gas limit per block from 60 million to 200 million. That’s a credible technical catalyst that some institutional players appear to be positioning around.
Charles Schwab has also announced plans to launch direct Bitcoin and Ethereum trading for US clients in the first half of 2026, signaling a significant step in traditional finance integration that could open both assets to millions of retail investors via a regulated on-ramp.
Binance Research noted that ceasefire signals could extend the ongoing crypto recovery, with Ethereum likely to outperform if risk appetite improves further. However, the firm also warned caution remains necessary, Iranian officials have described ongoing contacts as message exchanges rather than formal negotiations, and Israeli war aims remain harder than Washington’s.
Historically, April has been one of Bitcoin’s stronger months. Data from CoinGlass shows April has averaged a 33.4 percent return over the last decade, with a median gain of 7.57 percent. But analysts at BIT have cautioned that these patterns have become less reliable in recent years, especially when the asset enters the month with weak momentum.
The picture right now is one of cautious stabilization. Both Bitcoin and Ethereum have demonstrated they can bounce when geopolitical pressure eases, the question is if the easing is durable enough to hold.