February 2026 Market Performance

MARKET COMMENTARY

Crypto Market Review: Correction Deepens Amid Leverage Unwind and Geopolitical Shocks

February extended the correction that began in January, with Bitcoin and broader crypto assets enduring deleveraging pressure, policy uncertainty, and macro headwinds. Traditional risk assets demonstrated relative resilience, while digital markets deepened drawdowns before showing tentative stabilization late in the period.

Bitcoin opened February around $78,000, before plunging to a low of $60,000 on February 6 in a flash crash tied to heavy liquidations, recording its lowest-ever Extreme Fear reading of 5, then rebounded to test $70,000 before consolidating in the mid-$60,000s to low-$70,000s by month-end. Bitcoin closed the month down 15%, pushing year-to-date losses beyond 25%. Ethereum declined 19.6%, Solana fell 20%, and the total crypto market cap fell 16% to near $2.38 trillion.

Deleveraging dominated, with perpetual futures and leveraged positions unwinding sharply amid thin liquidity. Bitcoin’s flash crash exemplified the pain before a 17% bounce. ETF outflows intensified, reversing 2025 inflows, as institutions adopted caution amid tariff escalations and renewed Middle East tensions. The defining geopolitical event was the U.S.-Israeli strikes on Iran commencing February 28, which initially triggered sharp risk aversion but quickly gave way to a surprising recovery dynamic in crypto.

By late February, stabilization emerged, with Bitcoin basing in the $63,000-$70,000 range and smart money showing signs of repositioning.

FEBRUARY MACRO OUTLOOK:

Resilient Growth with Policy Restraint
Global liquidity stayed ample yet uneven, as central banks paused amid sticky inflation and fiscal strains. The U.S. economy remained solid, with real GDP growth around mid-2% for 2026, supported by AI-driven capital expenditure and private consumption despite tariff impacts. The labour market moderated, with unemployment holding near 4.3-4.5% and job gains slowing.

The February FOMC (Federal Open Markets Committee) minutes (released mid-month) and signals reinforced the hold at 3.5%-3.75%, with near-unanimous support for pausing after 2025 cuts. Divisions surfaced: some members signalled openness to hikes if inflation persisted, while others foresaw one or two cuts later in 2026, conditional on data. The dot plot projected a single quarter-point reduction for the year, reflecting a neutral stance amid balanced risks. Inflation remained above 2%, driven by wages, tariffs, and supply pressures.

U.S. PMI (Purchasing Manager’s Index) readings offered mixed signals: Manufacturing PMI eased to around 52.4, signalling slowing expansion due to tariffs, elevated costs, and export weakness. Services held steadier, bolstering activity. The broader 2026 outlook eyed 2.2% GDP growth, tempered by immigration policies and deficits approaching 6% of GDP. Emerging markets benefited from inflation moderation, but U.S. policy risks sustained elevated volatility.

CRYPTO OUTLOOK:

Correction Persists, Yet Relative Stability Emerges Post-Geopolitical Shock

Bitcoin’s personality shift deepened in February: it initially failed to function as a classic safe haven, correlating tightly with equities in risk-off phases and underperforming gold amid uncertainty. Leverage through perps and ETFs amplified downside, turning moderate macro caution into pronounced drawdowns, with no evident hedge role when flows chased proven stores.

Early February extended January’s turbulence, featuring flash crashes and billions in liquidations amid tariff uncertainty and weak data. Mid-month rebounds indicated exhaustion selling without full capitulation—leverage normalised in an orderly manner.

A key development was the U.S.-Israeli strikes on Iran beginning February 28, which tested Bitcoin’s resilience in real time. Initial reaction saw sharp volatility and a dip toward $63,000 as risk assets sold off broadly. However, Bitcoin demonstrated notable relative stability compared to gold and U.S. equities in the weeks following. While gold traded flat to modestly lower and major indices like the S&P 500 declined 1-3%, Bitcoin rebounded strongly, posting gains of 7-11% from the conflict onset, trading back above $70,000 and briefly nearing $74,000. This outperformance represented a clear inflection point: in a significant global uncertainty event, Bitcoin demonstrated greater stability than classic safe-haven assets like gold and outperformed equities, drawing net inflows instead of enduring extended selling pressure.

Structural elements driving this resilience included Bitcoin’s round-the-clock trading capability, ongoing accumulation via spot ETFs, and strengthened institutional holdings. These factors collectively position Bitcoin as an emerging geopolitical shock absorber, capable of channelling capital during turmoil, rather than solely functioning as a high-beta risk-on asset tied to broader equity movements.

Looking ahead, further downside toward $50,000-$60,000 remains possible if macro tightens, but catalysts such as regulatory progress (Clarity Act), stablecoin expansion, or liquidity support could drive a reversal. Quantum preparedness and ETF flows offer long-term tailwinds.

Portfolio Update

Portal Radiance Multi-Strategy Fund

The Portal Radiance Multi-Strategy Fund was down 58.9% for the month of February, after a decision was made to exit the perpetual futures positions ahead of the flash crash on February 6. The Fund was able to replace its linear perpetual futures exposure with a defined risk position with convexity via long Calls and is waiting for this strategy to play out.

The focus remains on a disciplined recovery to rebuild in a staged, risk-controlled manner. The recovery sequence is clear to us:

• Stabilise capital
• Scale through market-agnostic strategies
• Compound via directional exposure responsibly

We are targeting recovery and beyond within 12–24 months, subject to market conditions.

As always, feel free to reach out with any questions or to discuss how our strategies may suit your portfolio.

_{This email contains general information only and is not investment advice. Please see the full disclaimer at the end of the report.}