On February 19, the crypto market turned cautious. Bitcoin remained nearly 46% below its October peak of $126,000, weighing heavily on sentiment.
Traders no longer expected the Federal Reserve to cut rates at its March meeting. At the same time, liquidity entered the system and support for the CLARITY Act strengthened.
Macro-restriction dominated the headlines. Structural support is kept quietly underneath. Was this another disruption, or a preparation for a turnaround?
Rate cuts are off the table now that the Fed is adding a large amount of liquidity
The FOMC minutes ended hopes for a March shift. The target rate odds showed a 94.1% chance of rates remaining at 350-375 basis points.
Source: CME FedWatch Tool
The message reinforced ‘longer higher’.
However, the Federal Reserve added $18.5 billion through overnight repos. That was one of the largest liquidity injections since 2020.
This move coincided with a subtle easing of financial conditions. Traders saw contradiction instead of clarity.
The policy remained steadfast. Liquidity quietly increased. That tension roiled the risk markets.
CLARITY opportunities increase
Regulatory sentiment shifted aggressively. The polymarket probability that the CLARITY Act would become law increased to 90%.
Source: Polymarkt
In particular, political support around the formal reform of the crypto market structure was strengthened. A signed law could reshape institutional trust.
However, prediction markets measure belief, not law. Therefore, traders hesitated to ensure price certainty.
Quantum fears are surfacing again
Since the fourth quarter of 2025 Bitcoin [BTC] underperformed when quantum anxiety resurfaced.
About 3.5 million BTC, almost 18% of the total supply, remained lost or dormant. Markets feared that even a partial recovery, especially of older wallets with exposed public keys, could change supply expectations.
However, Strategy CEO Michael Saylor pushed back. He said,
“The network upgrades, active coins migrate, lost coins remain frozen. Security goes up. Supply goes down. Bitcoin gets stronger.”
As of February 1, approximately 8.63 million BTC were held by retail and other entities, 2.30 million on exchanges, and 1.80 million held by miners.
Public and private companies held about 1.42 million, ETFs and funds held about 1.40 million, and governments held a smaller share.
Source:
Institutions have accumulated almost as much as the dormant estimate since 2020.
Meanwhile, 13 to 14 million BTC ran this cycle without a collapse. Exchange rates continued to fall as Bitcoin defended rising support near $57,000.
Source: TradingView
This had to stay strong.