Crypto Market Navigates Sharp Reversal: From Dogecoin's Slump to Multi-Asset Rebound

The cryptocurrency landscape saw dramatic swings in recent sessions, with Dogecoin initially bearing the brunt of the selloff before broader crypto assets staged a technical rebound. As of late February 2026, the market painted a starkly different picture than the downturns witnessed earlier, showcasing the volatility that defines digital asset trading. Bitcoin bounced back to near $68,400, while most altcoins followed suit with gains ranging from mid-single to double-digit percentages.

FOMC Catalyst Sparks Broader Crypto Sell-off

Federal Reserve Chair Jerome Powell’s recent communications triggered significant turbulence across all risk assets, including the crypto sector. Powell’s hawkish stance on 2025 rate cuts—signaling only two expected reductions instead of the market’s anticipated three—sent ripples through trading floors worldwide. The timing proved particularly sensitive, as Powell also addressed questions about the central bank’s regulatory position on bitcoin ownership, citing existing restrictions that prevent the Fed from holding the asset.

This macro headwind cascaded into equity markets first, with the Nasdaq plummeting 3.5% and the S&P 500 dropping 2.9% since the FOMC meeting. Bitcoin followed with initial declines exceeding 6%, while the broader crypto market absorbed the shock. Solana (SOL), Ether (ETH), and Cardano (ADA) all faced substantial pressure, with some altcoins testing 9% losses during the height of the selloff. Dogecoin proved to be the weakest performer, sliding 11% at its nadir and extending weekly losses beyond 21%.

Excess Bullish Positioning Reveals Market Vulnerability

Traders at Singapore-based QCP Capital traced the root cause of the downturn not merely to Fed policy, but to what they characterized as dangerously overcrowded bullish positioning accumulated over the previous month. Following Trump’s election-related rally, risk assets had enjoyed an uninterrupted positive run that left the market vulnerable to any adverse shock.

“Since the election, risk assets have enjoyed an impressive one-sided run, leaving the market extremely vulnerable,” QCP analysts noted. The Fed’s dot plot revision—showing only two rate cuts instead of three due to persistent inflation—became the trigger for panic liquidations. This analysis suggests that market structure, rather than fundamentals alone, drove the intensity of the correction. Investors had become overly concentrated on the bullish side, leaving little room for profit-taking or position adjustment.

Liquidation Wave Hits $890M Across Markets

The sharp price movements translated into severe consequences for leveraged traders. Over $890 million in combined long and short liquidations cascaded through futures markets within 24 hours of the FOMC announcement. This liquidation cascade demonstrated how quickly sentiment can reverse when macro catalysts emerge, and how thin liquidity in certain price ranges can amplify selling pressure.

The CoinDesk 20 (CD20), an index tracking the largest crypto assets by market capitalization, declined 5.5%, reflecting the broad-based nature of the selloff. This wasn’t an isolated event affecting bitcoin or a single altcoin—the downturn encompassed the entire digital asset ecosystem from established projects to emerging tokens.

Technical Bounce Signals Potential Reversal in Altcoins

Within days, the crypto market entered a new phase characterized by short-squeeze dynamics and sharp technical rebounds. Bitcoin jumped back toward $69,000 levels, jolting altcoins including ETH, SOL, DOGE, and ADA. Crypto-related equities such as Circle, Coinbase, and Strategy also participated in the recovery, suggesting that the panic phase had exhausted itself.

Market observers like Joel Kruger from LMAX Group urged caution about the rebound’s durability, characterizing it as a technically-driven bounce fueled by bearish positioning unwinding rather than new fundamental bullish catalysts. Still, Joshua Lim from FalconX noted that some funds were actively chasing the rally, rotating aggressively into volatile altcoins and options positioning for potential upside continuation.

Resistance Levels Define Next Phase for Bitcoin

For bitcoin to confirm a meaningful structural recovery, technical levels will prove crucial. Key resistance zones around $72,000 and $78,000 must be breached on a sustained basis rather than through mere intraday spikes. Breaking these levels convincingly would signal transition from technical bounce to genuine trend reversal, potentially reigniting the bullish narrative that dominated November and December 2025.

Historical context provides some support for optimism. December has historically been a bullish period for bitcoin, with the asset closing the month in positive territory six times since 2015, with gains ranging from 8% to 46% (including the outsized 2020 rally). This seasonality—driven by year-end bonus spending, tax-loss harvesting effects beginning to fade, and general holiday-season sentiment—could support crypto valuations into quarter-end.

However, the sharp volatility witnessed during this period underscores the crypto market’s sensitivity to macro shifts and its tendency to attract overleveraged positioning. Whether this rebound represents the beginning of a new bull phase or merely a technical countertrend bounce will depend on whether bitcoin and altcoins can establish new higher lows and break through identified resistance zones on volume.