In February 2026, the crypto market experienced severe volatility, with Bitcoin dropping below the key support level of $68000, and Ethereum also facing pressure around $1990. Market sentiment oscillates between fear and hope, influenced by a combination of the Fed's policy shift, ETF fund flows, and Ethereum's technical upgrades, forcing investors to make difficult choices. This article will delve into the core messages of the crypto market in February, analyzing negative and positive signals to guide investors.
1. Negative factors: Three major risks are impacting the market
The Fed's hawkish stance delays interest rate cut expectations
Federal Reserve Chairman Powell stated in February that "current interest rates are still at the upper end of the neutral range," indicating that the first rate cut may be delayed until June 2026. This statement has raised market concerns about tightening liquidity, with the dollar index rising to 107 and the real yield on U.S. Treasuries rising to 2.4%, directly suppressing the valuation of crypto assets. Historical data shows that when U.S. dollar liquidity tightens, the average drawdown for Bitcoin and Ethereum can reach 25%.
Continuous net outflow of Bitcoin ETF funds
According to CoinGlass data, Bitcoin spot ETFs have seen a net outflow for 15 consecutive days, with a total amount exceeding $1.2 billion. The selling behavior of institutional investors has intensified market panic, especially the continuous reduction of Grayscale Bitcoin Trust (GBTC), which is seen as a bearish signal. Meanwhile, Ethereum ETF also saw a weekly net outflow of $8.96 million, indicating a rise in short-term risk aversion among institutions.
The regulatory storm continues to escalate
The U.S. SEC recently launched investigations into multiple crypto exchanges, focusing on cracking down on "unregistered securities sales". Additionally, the EU (Crypto Asset Market Regulations) (MiCA) has entered the enforcement phase, requiring crypto companies to strictly comply with anti-money laundering and investor protection regulations. Some small and medium projects have been forced to exit the market due to high compliance costs, putting overall pressure on the market.
Two, Positive Signals: Three major opportunities are brewing
Ethereum Layer 2 ecosystem is experiencing explosive growth
Although prices are under pressure, the Ethereum Layer 2 ecosystem is rising against the trend. Arbitrum's daily active users have exceeded 1.5 million, Optimism's TVL has stabilized at $8 billion, and the number of projects in the Polygon ecosystem has surpassed 5000. Technical data shows that Layer 2 transaction fees are only 1/20 of Ethereum's mainnet, with throughput increasing tenfold, laying a solid foundation for Ethereum's long-term value.
Institutional long-term allocation willingness remains unchanged
Although there has been a short-term outflow of ETF funds, as of February 2026, the total net inflow of Bitcoin ETFs in the U.S. still reached $18 billion, and the total net inflow of Ethereum ETFs was $9.6 billion. Institutions like Grayscale and BlackRock maintain high positions, indicating a long-term optimistic strategic layout for crypto assets. For example, BlackRock's Bitcoin ETF increased its holdings by 12,000 Bitcoins when prices were falling.
Technological upgrades drive performance breakthroughs
The Ethereum Danksharding upgrade is expected to be completed in Q3 2026, at which point Ethereum's throughput will increase tenfold, and Gas fees will decrease by 80%. Additionally, Ethereum staking has surpassed 30 million coins, with staking protocols like Lido maintaining annual yields of 4.5%-5.2%, attracting a large amount of long-term funds and providing support for Ethereum's price.
Three, Market Sentiment: The fear index hides opportunities
The fear and greed index has dropped to 29
The current crypto fear and greed index is in the "fear" range (25-49). Historical data shows that when the index is below 30, the market often approaches the bottom. During the FTX crash in 2022, the index fell to 15, after which Bitcoin surged by 400%; in the regulatory storm of 2024, the index was at 22, and Ethereum doubled in three months.
Oversold signals appear
The Bitcoin RSI indicator has fallen below 30, with a "long lower shadow" appearing on the weekly chart, indicating strong bottom-buying support; Ethereum has formed a double-bottom structure around $2000, creating a strong support zone with the June 2025 low. Technical analysts believe that if the price stabilizes above $2000, Ethereum is expected to rebound to $2600-$2800.
Four, Investment Strategy: Seize current opportunities and respond to future challenges
Short-term strategy: Build positions in batches and seize rebound opportunities
Bitcoin: Build positions in batches in the range of $65000-$68000, targeting $75000-$80000, with a stop loss at $60000.
Ethereum: Build positions in batches in the range of $1900-$2000, targeting $2500-$2600, with a stop loss at $1800.
Risk Control: Position size should not exceed 30% of total funds, strictly set stop losses, and avoid high-leverage operations.
Medium to long-term strategy: Focus on quality assets and hold patiently
Focus on leading Layer 2 projects (Arbitrum, Optimism), Ethereum ecosystem projects, and quality assets like Bitcoin ETF.
Long-term holders can adopt a dollar-cost averaging strategy to average costs and reduce market volatility risks.
Risk Prevention: Beware of three major traps
Avoid chasing highs and cutting losses: Current market sentiment is unstable, and blindly following trends can easily lead to losses.
Stay away from air coins: Under the tightening regulatory environment, projects without fundamental support may go to zero at any time.
Pay attention to macro data: Closely monitor Federal Reserve policies, non-farm data, and other macroeconomic indicators to adjust strategies in advance.
[Conclusion]
In February, the crypto market is in a tug-of-war between the end of negative sentiment and technical overselling, with short-term volatility not changing the long-term trend. Investors should remain calm, seize the opportunities of undervalued quality assets, and strictly control risks. As Buffett said: "When others are fearful, I am greedy; when others are greedy, I am fearful." Maintaining rationality amid market panic is key to succeeding in the long-term game of the crypto market.
[Interactive Topic]
Do you think Bitcoin will first drop below $60000 or rebound to $80000? Feel free to share your views in the comments.
