On the 19th of February, the crypto market turned cautious. Bitcoin remained nearly 46% below its October $126,000 peak, weighing heavily on sentiment.
Traders no longer expected the Federal Reserve to cut interest rates at its March meeting. At the same time, liquidity entered the system and support for the CLARITY Act strengthened.
Macro restraint dominated headlines. Structural support quietly held underneath. Was this another breakdown, or a setup for reversal?
Rate cut is off the table as Fed adds major liquidity
The FOMC minutes ended hopes of a March shift. Target Rate Probabilities showed a 94.1% chance that rates would remain at 350–375 basis points.
Source: CME FedWatch Tool
The message reinforced “higher for longer.”
However, the Federal Reserve added $18.5 billion through overnight repos. That marked one of the largest liquidity injections since 2020.
That move aligned with a subtle easing in financial conditions. Traders saw contradiction instead of clarity.
Policy restraint stayed firm. Liquidity quietly expanded. That tension unsettled risk markets.
CLARITY odds spike
Regulatory sentiment shifted aggressively. Polymarket odds for the CLARITY Act being signed into law surged to 90%.
Source: Polymarket
Notably, political support strengthened around formal crypto market structure reform. A signed Act could reshape institutional confidence.
However, prediction markets measure belief, not law. Therefore, traders hesitated to price certainty.
Quantum fears resurface
Since Q4 2025, Bitcoin [BTC] underperformed as quantum fears resurfaced.
About 3.5 million BTC, nearly 18% of the total supply, remained lost or dormant. Markets feared even partial recovery, especially from older wallets with exposed public keys, could shift supply expectations.
However, Strategy’s CEO Michael Saylor pushed back. He said,
“The network upgrades, active coins migrate, lost coins stay frozen. Security goes up. Supply comes down. Bitcoin grows stronger.”
As of the 1st of February, roughly 8.63 million BTC were held by retail and other entities, 2.30 million sat on exchanges, and 1.80 million were held by miners.
Public and private companies controlled about 1.42 million, ETFs and funds held around 1.40 million, and governments held a smaller share.
Source: X
Institutions accumulated nearly as much as the dormant estimate since 2020.
Meanwhile, 13 to 14 million BTC rotated this cycle without collapse. Exchange balances kept declining as Bitcoin defended ascending support near $57K.
Source: TradingView
This had to hold strong.
