As Fed Turns Hawkish and Middle East Tensions Rise, Is Bitcoin Headed to Test $60,000?

▲ With the Fed’s hawkish stance and rising tensions in the Middle East! Is Bitcoin ultimately heading to test the $60,000 level?/ChatGPT-generated image     ©

Amid persistent macroeconomic headwinds and escalating geopolitical tensions in the Middle East, Bitcoin (BTC), the leading cryptocurrency, has fallen into a deep consolidation phase without finding a clear breakout catalyst. Institutional capital outflows have continued for five consecutive weeks, and even sentiment in the derivatives market has weakened, prompting some analysts to warn that a harsh crypto winter similar to the past could reemerge, with a worst-case scenario seeing prices plunge to as low as $28,300.

According to investment media outlet FXStreet on February 20 (local time), Bitcoin is currently trapped in a narrow range between $65,729 and $71,746, lacking clear direction. Data from analytics platform SoSoValue show that U.S. spot Bitcoin ETFs recorded $403.9 million in net outflows this week alone, marking five straight weeks of withdrawals and signaling a sharp slowdown in institutional demand. Although Strategy, led by Michael Saylor, reportedly purchased an additional 2,486 BTC at an average price of $76,027, broader macro uncertainties—including the Federal Reserve’s hawkish tone confirmed in the latest FOMC meeting minutes and the possibility of U.S. military strikes against Iran—continue to weigh heavily on the market.

Derivatives and on-chain indicators also point to a strongly defensive stance. Funding rates in the derivatives market have remained negative at around -0.64% for 11 consecutive days, while open interest has fallen below 260,000 contracts for the first time since last October. This suggests that long-position investors are gradually exiting amid Bitcoin’s prolonged sideways movement. Moreover, the level of accumulation observed during the recent dip toward $60,000 was significantly weaker compared to the period following the collapses of Luna and FTX, underscoring a marked decline in dip-buying appetite.

Adding to the pressure, concerns over the financial soundness of Tether (USDT), the dominant player in the stablecoin market with a $17 billion loan book, have resurfaced. Despite a sharp increase in its circulating supply, Tether’s equity ratio has reportedly shrunk to 3.3% as of the end of 2025. This implies that a mere 3.3% decline in the value of its reserves could jeopardize its dollar peg. At the same time, the proportion of risk assets such as Bitcoin and gold in its reserves has expanded to 24%, raising warnings that a systemic crisis could threaten liquidity across the broader crypto ecosystem.

Chart analysts note that the current price trajectory closely resembles the early pattern of the severe bear market that began in late 2021. If this bearish cycle repeats itself, Bitcoin could fall approximately 77.51% from its 2025 peak of $126,199, potentially dropping to around $28,300. On the daily chart, the Relative Strength Index (RSI) stands at 36, indicating bearish momentum. While the Moving Average Convergence Divergence (MACD) remains in a positive crossover, a breakdown below the key support level of $65,729 could trigger further sell-offs toward the $60,000 region.

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