Down-levelled with no rationale given

I'm facing a bit of a challenge at my current workplace and wanted to get some opinions on my situation from the readers here. I started as an IC at a well-known public tech company nearly six months ago at a level two down from my initial expectation.

When I was starting, they weren't actually clear about this; there was a miscommunication and I thought I was starting one rung above, as it had the same title as my current level and according to the interviewer I was "close" to getting the level I had applied for (2 levels above). This was challenging enough to navigate, but the compensation is "good enough" so I decided to move past it, thinking I am partially at fault for making the assumption and not doing my due diligence. Plus, chatting with my management chain, I've been told I'm doing excellent work, exceeding expectations, and that I will certainly reach this level and they wish they had more people like me. So I have been prepared to grind through the promo process to get to where I "should" be (according to the job description and the work I have been taking on).

Recently, I got feedback on my first performance period and received an evaluation that is completely different and blocks any potential promotion. I have been told I need to "move past all this" and that no rationale will be ever be shared. The unsaid thing is that I will be seen as a problem if I continue to push it. Chatting with more senior members of the team in confidence, they were shocked to find out what level I was placed at, assuming I was at the higher one (due to them having the same title).

I learned today (prepping to interview candidates) that the recommendation for my level is 5+ years of experience. The next level up is 10+. I have 16 years of professional experience. My background before this job: built and ran a successful dev team right out of uni, built and sold my own company, have been both a director of engineering and principal dev for multiple years for a 500-person company. I have been praised for my written communication skills, and I have even taught CS before professionally. My coworkers have given me feedback that I am friendly and outgoing and always willing to mentor them. In the past I have been consistently ranked at the top of my peer group and have always advanced quickly.

What I want to know is: what likely happened here? How can I regain my composure and motivation, moving past this feeling of being undervalued? Could staying at this low level harm my chances of future employment, i.e. could this leveling stay with me due to the reputation of the company?

Appreciate any insights, even if it's that my expectations are too high and that things are working as intended. I would very much like to move past this feeling I have right now.