WEEKLY CRYPTO MARKET UPDATE

Week Ending 19th February 2026

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HEADLINE

BTC US$66,761. Extreme fear grips markets.

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IN MARKETS

Crypto markets extended their downward trajectory this week amid persistent risk-off sentiment across global financial markets. Institutional flows remained subdued as traditional equity markets continued to exhibit volatility, with correlations between digital assets and broader risk assets remaining elevated. The absence of significant macroeconomic catalysts has left price action largely driven by technical factors and positioning adjustments.

Bitcoin traded at US$66,761, declining 0.7% over the 24-hour period, while Ethereum posted US$1,967, down 0.9%. Alternative layer-1 protocols experienced more pronounced weakness, with Solana falling 3.2% to US$82 and XRP declining 2.9% to US$1.43. The broader market selloff reflects continued deleveraging across the crypto derivatives complex, with open interest declining across major exchanges.

Market microstructure indicators suggest deteriorating sentiment, with bid-ask spreads widening and order book depth thinning across major trading pairs. The Fear & Greed Index registered an extreme reading of 9, indicating "Extreme Fear" – a level historically associated with capitulation events and potential medium-term bottoms. This represents one of the lowest sentiment readings observed since the 2022 bear market, suggesting significant pessimism among retail and institutional participants alike.

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FROM THE OTC DESK

The most significant development impacting institutional positioning this week centers on the ongoing legal uncertainty surrounding prediction markets and regulatory jurisdiction. TD Cowen's analysis indicating that state regulators maintain an edge over the CFTC in the prediction markets legal battle has introduced additional regulatory ambiguity into the crypto ecosystem. This uncertainty compounds existing concerns about the regulatory framework for digital assets more broadly, contributing to institutional caution and reduced risk appetite.

Price action has been characterized by thin liquidity conditions, with BTC struggling to maintain support above the US$66,000 level. The lack of significant buying interest at current levels suggests institutions remain sidelined pending greater regulatory clarity or compelling technical entry points.

OTC Desk Activity:

• Net selling pressure from long-term holders continuing to dominate flow, particularly in BTC and ETH, with minimal institutional accumulation observed at current price levels.
• Increased hedging activity via options markets, with put skew expanding as institutions position for potential further downside through March expiries.
• Stablecoin rotation into short-duration Treasury products accelerating, reflecting preference for yield-bearing alternatives amid crypto market weakness and elevated money market rates.

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KEY ECONOMIC CALENDAR

Monday, 24 Feb, 22:30 SGT – US Durable Goods Orders (Consensus +1.2%) Tuesday, 25 Feb, 23:00 SGT – US Consumer Confidence Index (Consensus 102.5) Wednesday, 26 Feb, 21:15 SGT – US ADP Employment Change (Consensus +145k) Thursday, 27 Feb, 21:30 SGT – US GDP Growth Rate (Second Estimate, Consensus +2.8%) Thursday, 27 Feb, 21:30 SGT – US Initial Jobless Claims (Consensus 220k) Friday, 28 Feb, 21:30 SGT – US Core PCE Price Index (Consensus +2.6% YoY) Friday, 28 Feb, 23:00 SGT – University of Michigan Consumer Sentiment (Final, Consensus 67.8)

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IN HEADLINES

Ledn Completes US$188 Million Bitcoin-Backed Bond Issuance

Canadian crypto lender Ledn successfully sold US$188 million worth of bitcoin-backed bonds, according to Bloomberg reporting. The transaction represents one of the largest structured credit products backed by digital assets to date and signals continued institutional appetite for yield-generating crypto-collateralized instruments despite broader market weakness. The bond issuance provides insight into the maturation of crypto credit markets, with institutional investors increasingly comfortable with bitcoin as collateral for fixed-income products. The structure and pricing details of the bonds were not disclosed, but the successful placement suggests that credit investors view current bitcoin price levels as providing adequate collateral coverage. This development is particularly noteworthy given the challenging market environment and may indicate that institutional credit desks view current valuations as attractive entry points for structured exposure. The transaction could catalyze additional issuance activity if market conditions stabilize.

Coinbase Expands DeFi Lending Collateral Options via Morpho Integration

Coinbase announced the addition of XRP, Dogecoin, Cardano, and Litecoin as eligible collateral for its onchain lending product through integration with Morpho protocol. This expansion significantly broadens the range of assets institutional and retail users can leverage for borrowing purposes, moving beyond the traditional BTC and ETH collateral base. The integration with Morpho, a leading DeFi lending protocol, represents Coinbase's continued push into decentralized finance infrastructure while maintaining its centralized exchange presence. For institutional desks, this development provides additional flexibility for balance sheet management and enables more sophisticated treasury strategies utilizing alternative layer-1 assets. The move also reflects growing institutional comfort with DeFi protocols as counterparties, particularly those with established track records and robust risk management frameworks. Market participants should monitor utilization rates and borrowing costs across these newly eligible collateral types as indicators of institutional demand for leverage against alternative cryptocurrencies.

Prediction Markets Face Regulatory Uncertainty as State-Federal Jurisdictional Battle Intensifies

TD Cowen analysts issued a research note suggesting that state regulators maintain a legal advantage over the CFTC in the ongoing jurisdictional dispute regarding prediction markets regulation. Despite the CFTC's intervention in the matter, the analysis indicates that state-level gaming and gambling authorities may ultimately prevail in asserting regulatory authority over prediction market platforms. This assessment introduces significant uncertainty for crypto-based prediction market operators including Polymarket and Kalshi, which have experienced substantial growth in trading volumes over the past year. The jurisdictional ambiguity could force platforms to navigate a complex patchwork of state-by-state regulations rather than a unified federal framework, potentially limiting market access and increasing compliance costs. For institutional participants, this regulatory uncertainty may dampen enthusiasm for prediction market exposure and could trigger position reductions until greater clarity emerges. The outcome of this legal battle will have broader implications for the regulatory treatment of novel crypto-native financial products and may establish precedents affecting other areas of digital asset regulation.

World Liberty Financial Token Rallies 18% as Eric Trump Addresses Industry Forum

World Liberty Financial's WLFI token surged 18% to US$0.118 as the World Liberty Forum commenced, with Eric Trump delivering remarks suggesting the crypto industry remains in early stages of development, characterizing current progress as being at the "one-yard line." The Trump family-backed DeFi project has attracted significant attention due to its political connections, though institutional participation has remained limited given the project's nascent stage and regulatory uncertainties. The forum's launch and associated token price movement highlight the continued influence of political narratives on crypto market sentiment, particularly as the 2026 U.S. midterm elections approach. However, institutional desks should note that WLFI's relatively thin liquidity and limited trading history make it susceptible to significant volatility and potential manipulation. The project's emphasis on stablecoin infrastructure and DeFi accessibility aligns with broader industry trends, but execution risk remains elevated. Market participants should monitor whether the forum generates substantive policy proposals or remains primarily a branding exercise.

Goldman Sachs CEO David Solomon Discloses Minimal Bitcoin Holdings

Goldman Sachs CEO David Solomon revealed he owns a "very little" amount of bitcoin during public remarks this week, providing rare insight into a major Wall Street executive's personal crypto positioning. While Solomon's minimal holdings might initially appear bearish, the disclosure actually represents progress in institutional acceptance – major bank CEOs are now comfortable publicly acknowledging any bitcoin ownership, a significant shift from the outright hostility displayed by many banking executives during previous market cycles. Goldman Sachs has substantially expanded its digital assets infrastructure over the past two years, offering bitcoin derivatives, custody services, and investment products to institutional clients despite its CEO's personal skepticism. This disconnect between institutional service provision and executive personal conviction is common across traditional finance and should not be interpreted as indicative of Goldman's strategic commitment to the asset class. For market participants, the more relevant signal is Goldman's continued infrastructure investment and client service expansion, which suggests the firm views crypto as a permanent component of institutional portfolios regardless of individual executive opinions.

OpenAI and Paradigm Collaborate on AI-Powered Smart Contract Security Tool

OpenAI and venture capital firm Paradigm announced a partnership to develop an AI agent specifically designed for smart contract security auditing. The collaboration aims to leverage OpenAI's advanced language models to identify vulnerabilities, optimize gas efficiency, and improve overall code quality for blockchain-based applications. This development addresses one of the most significant barriers to institutional DeFi adoption: smart contract risk and the limitations of traditional auditing processes. Current manual audit procedures are time-consuming, expensive, and often fail to identify complex vulnerabilities before exploits occur. An AI-powered auditing tool could dramatically reduce both the cost and timeline for security reviews while potentially improving detection rates for novel attack vectors. For institutional participants, enhanced security infrastructure reduces counterparty risk when interacting with DeFi protocols and could accelerate allocation to onchain strategies. However, the tool's effectiveness will require extensive real-world testing, and institutions should maintain existing security protocols until the AI agent demonstrates consistent performance across diverse smart contract architectures.

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Until next week, happy trading!