Market Update February 2026: Between doubt & action

February has tested investor resolve. After January’s 11% decline, Bitcoin shed another 12% in the opening weeks of this month. The drawdown has exposed a market in transition: long-term holders have stepped back, institutional flows have cooled, and short-term participants now dominate price action.

This edition unpacks what the data reveals about current market structure and where key support levels sit. The analysis examines how Blockrise's Fundamentals strategy has navigated the volatility and what factors inform our positioning. Beyond Bitcoin, we cover regulatory scrutiny of Trump-linked crypto ventures, Tether’s growing gold reserves, and macro forces shaping risk assets, from AI-driven market corrections to diplomatic tensions in the Middle East.

Market Update

An analysis of Bitcoin fundamentals and Blockrise's Fundamentals strategy:

Bitcoin Analysis

January’s price action told a story of exhausted momentum. Bitcoin fell 11% for the month, though a brief rally to €84k offered a glimpse of remaining demand. That bounce, however, was met with selling from holders whose cost basis sat at that level, investors who had been waiting for an exit. This dynamic, where rallies are absorbed by profit-taking rather than fuelling further gains, often characterises late-cycle behaviour.

The spot market tells a sobering story. ETF inflows, which drove much of 2024-2025’s rally, have slowed considerably. Treasury acquisitions by corporate buyers have likewise faded. Without these demand sources, the market lacks the buying pressure needed to absorb selling from long-term holders who have been distributing to short-term speculators over recent months.

Derivatives markets reflect growing caution. Open interest has declined as leveraged positions unwind, and the cost of put options has risen, traders are paying a premium for downside protection. This shift from aggressive long positioning to hedging behaviour suggests professional participants have turned defensive.

On-chain data highlights two critical zones. Short-term holders, who now dominate the market, have an average cost basis between $70k and $80k. This range represents their break-even point and historically acts as a psychological anchor. Below that, between $65k and $70k, sits a dense cluster of coins held by buyers with stronger conviction, addresses that have held through previous drawdowns. These zones often provide support during corrections, as holders at these levels tend to add to positions rather than sell.

Several conditions bear watching: whether long-term holders resume accumulation, how leverage positioning evolves, and whether institutional buyers return with meaningful size. These factors have historically preceded sustained directional moves.

Fundamentals

Blockrise offers comprehensive care with its asset management strategy called "Fundamentals." This strategy involves managing assets in Bitcoin versus an euro position, reassessing and adjusting these positions monthly.

The Fundamentals strategy declined 10% in January, followed by an additional 9% in the first week of February. These drawdowns, while significant, remain consistent with Bitcoin’s historical volatility profile. The current allocation stands at 92.5% Bitcoin and 7.5% euro, a positioning that reflects our assessment of medium-term conditions rather than short-term price movements.

The upcoming difficulty adjustment warrants attention. Projections indicate a decrease of approximately 15%, which would mark one of the larger downward adjustments in recent memory. Difficulty drops when miners leave the network, typically due to unprofitable conditions. While this can signal near-term stress, reduced difficulty also lowers the cost of production for remaining miners, a factor that has historically preceded periods of supply tightening.

Given current output from the allocation model, Blockrise is evaluating an increase in Bitcoin exposure. Our monthly rebalancing process will weigh these indicators against evolving market conditions. As always, position adjustments aim to balance opportunity with risk management.

Crypto Highlights

An overview of the most notable events in crypto:

Treasury Secretary faces questions on Trump-linked crypto venture

A congressional hearing turned contentious when US Treasury Secretary Scott Bessent faced questioning about potential conflicts of interest involving a cryptocurrency firm with ties to the Trump family. The House Financial Services Committee session, ostensibly focused on the Treasury’s oversight role, became a flashpoint for broader concerns about crypto regulation and political entanglement.

Representative Gregory Meeks drew attention to World Liberty Financial (WLFI), a crypto venture that reportedly received a $500 million investment from an Emirati-backed vehicle shortly before Trump’s inauguration. The investment secured a 49% stake in the company. Meeks urged Bessent to intervene in WLFI’s pending bank charter application with the Office of the Comptroller of the Currency until conflict of interest concerns are addressed.

Bessent maintained that the OCC operates independently and declined to commit to any review or intervention. The exchange grew heated, with Meeks accusing the Treasury Secretary of protecting the president from scrutiny. The confrontation underscores the regulatory uncertainty facing crypto projects with political connections, a dynamic that could shape the industry’s relationship with Washington in the years ahead.

Tether becomes world’s largest private gold holder

Deep in a Swiss bunker—one of over 300,000 built during the Cold War, sits a growing stockpile that has made Tether Holdings SA the world’s largest known holder of gold outside central banks and sovereign wealth funds. The stablecoin issuer now controls approximately 140 tons of the precious metal, a position built quietly over the past year.

The accumulation has been substantial enough to move markets. Senior traders at HSBC Holdings Plc handled gold purchases for Tether throughout 2024, contributing to the metal’s 65% annual rally. Most of the hoard backs Tether’s own reserves, though a portion supports its gold-backed token product.

Tether’s gold strategy mirrors that of central banks, which have been net buyers since 2010 as they diversify away from dollar-denominated assets. For the company, gold provides a hedge against the very fiat currencies its stablecoins are pegged to, a form of insurance should dollar confidence erode. The move also addresses long-standing questions about Tether’s reserve composition, offering a tangible asset base that exists outside the traditional banking system.

Macro Economy

An overview of relevant global economic events:

The AI narrative disrupts the market

Three years of AI enthusiasm collided with market reality this week. Previous sell-offs in the sector, and there have been several since ChatGPT launched, were contained affairs. This correction was different. Over two days, hundreds of billions in market value evaporated from stocks, bonds, and loans across Silicon Valley and beyond.

The catalyst appeared modest at first. Anthropic, the AI startup behind Claude, released a legal document review tool. The product itself was incremental. But the implications were not: if AI can automate contract review, it can automate financial analysis, code review, and countless other knowledge-work functions. The message to investors was clear, the companies that have profited from selling AI infrastructure may not be the ones that profit from AI’s deployment.

Markets initially punished software stocks, then broadened the sell-off across sectors. The pattern echoes previous technology bubbles. During the dotcom era, infrastructure providers boomed as companies raced to get online, but many failed to find sustainable business models once the building phase ended. Today’s AI infrastructure giants face a similar question: what happens when the tools they’ve built become commoditised?

Earnings reports from Microsoft, Salesforce, and Alphabet have reinforced these concerns. None explicitly blamed AI for disappointing results, but the pattern is consistent: spending on AI capabilities has exceeded expectations while revenue from AI products has lagged. For Bitcoin investors, the sell-off matters because risk appetite across asset classes tends to move together. A prolonged reassessment of tech valuations could weigh on speculative assets broadly.

Geopolitical risk in the Middle East

Diplomacy and military posturing are converging in the Middle East. Washington and Tehran have scheduled talks for 6 February in Oman, a venue shift from Turkey that reflects Iran’s desire to exclude regional powers from the discussion. The meeting follows weeks of escalating rhetoric, with the Trump administration threatening action in response to Iran’s crackdown on domestic protests.

The agenda centres on two issues: oil and nuclear capabilities. Iran’s preference is to focus on the former, seeking relief from sanctions that have constrained its economy. The US, represented by Secretary of State Marco Rubio, has signalled that nuclear discussions cannot be sidelined. “For talks to lead to something meaningful, this has to be included,” Rubio stated, a position that sets up early friction given decades of deadlock on the issue.

Military forces continue to build in the region as talks approach. For markets, the situation presents tail risk. Escalation could disrupt oil flows through the Strait of Hormuz, sending energy prices higher and reigniting inflation concerns. Conversely, a diplomatic breakthrough could ease sanctions and bring Iranian oil back to global markets, potentially pressuring prices. Bitcoin has historically shown mixed correlation with geopolitical events, sometimes rallying as an alternative to fiat currencies during instability, sometimes falling alongside broader risk-off moves.

Disclaimer

Blockrise™ is a trademark of Blockrise Capital B.V. in the Netherlands and other countries. Blockrise Capital B.V. is a private limited liability company registered in the Netherlands, under Chamber of Commerce number 74879782. Blockrise Capital B.V. holds a MiCAR licence with number 41000029, issued by the Dutch Authority for the Financial Markets (AFM). Blockrise Lending B.V. is a group company and does not hold a MiCAR-license.

‍