If you bought Bitcoin at the start of this year, January 1 is probably not a date you look back on fondly.
Bitcoin opened 2026 at $87,508 and closed the first quarter at near $67,000, a decline of roughly 23 to 24 percent in just three months, making Q1 2026 the worst opening quarter for the asset since 2018.
That year, Bitcoin shed nearly 50 percent in the same period, which turned out to be the start of one of the most brutal bear markets in crypto history. The comparison isn’t exactly comforting, even if the current decline is considerably less severe.
Bitcoin’s first-quarter slump capped an unusual stretch, nearly six months of consistent underperformance against US equities, a run that analyst Mark Connors of Risk Dimensions described as having no historical precedent.
“That’s never happened,” he said, pointing to data showing Bitcoin lagging the S&P 500 continuously since early October. The trend has reignited the old debate: is Bitcoin behaving like a hedge, or just another risk asset that moves with everything else when sentiment turns negative?
What drove the quarter
The dominant macro force across the quarter was the US-Iran conflict, which has been running since late February and effectively closed the Strait of Hormuz, a key oil shipping route. West Texas Intermediate crude crossed above $100 per barrel, and gasoline in the US hit $4 a gallon nationally for the first time since mid-2022.
That inflationary backdrop killed any realistic hope of a Federal Reserve rate cut in the near term. Fed Chair Jerome Powell signaled the central bank was comfortable waiting, diplomatic language, as one analyst put it, for “we’re not cutting, and we might hike if things get worse.”
Crypto-specific pressure added to the picture. Spot Bitcoin ETFs recorded roughly $3 billion in year-to-date outflows, with ETF holders sitting at an average entry price of around $83,956, well above where the market is trading now. Those holders are underwater, and some of that pain has translated into selling.
Bitcoin also followed a 25 percent decline in the final quarter of 2025, meaning anyone tracking performance across the past six months has watched the asset shed close to half its value from its late 2025 highs.
Ethereum didn’t escape either. ETH fell roughly 34 percent in Q1, making it the third-worst opening quarter in the asset’s history. For context, Ethereum’s historical average Q1 return is a gain of over 66 percent, so this quarter isn’t just bad, it’s the opposite of what a typical year looks like.
Where things stand going into Q2
Not everyone thinks this is the beginning of something worse. Connors pointed out that Bitcoin’s extended lag and the deleveraging that’s happened through Q1 could actually set up a rebound, though he said the timing would hinge largely on how geopolitical risk and energy markets evolve from here.
There’s also some historical comfort available, if you’re willing to look for it. In 2025, Bitcoin also posted a negative first quarter before going on to set a new all-time high near $126,000 later that year. Back in 2020, Q1 was also red before a strong recovery through the rest of the year. This suggests a bad start doesn’t automatically write the year off.
Analyst forecasts for year-end diverge considerably. JP Morgan holds a $170,000 target anchored in the thesis that corporate Bitcoin treasury accumulation has created a structural demand floor.
Standard Chartered trimmed its target to $100,000 after two earlier downgrades. Bernstein is holding at $150,000. Fidelity sits more conservatively at $65,000 to $75,000, describing the current period as “market exhaustion consistent with a standard bear year.”
The honest answer is that nobody knows. What’s clear is that Q1 2026 was rough by any historical measure, and Q2 opens with Bitcoin needing to reclaim ground it lost across six months of persistent selling, against a macro backdrop that hasn’t meaningfully improved.