Bitcoin is having its worst February since the 2022 crypto winter. Macroeconomic pressures and shifting investor sentiment have sent prices tumbling sharply. The wider crypto ETF market is also showing a clear split, with Solana gaining ground while Bitcoin bleeds.
Bitcoin entered February 2026 riding a wave of cautious optimism, but the month quickly turned into one of the worst in recent memory. By mid-February, Bitcoin had already shed more than 19% of its value, putting it firmly on track for its worst monthly performance since June 2022. Back then, the collapse of TerraUSD triggered a domino effect that wiped out major crypto firms, including Three Arrows Capital and BlockFi. This time around, the catalyst is different, but the pain is just as real.
Bitcoin is down roughly 22% in February, its worst monthly slide in three years, as President Donald Trump’s tariffs on major U.S. trading partners stirred fears of faster inflation, reduced chances of interest-rate cuts, and lower appetite for risky investments. Consequently, what started as a promising year for digital assets has quickly unraveled for holders of the world’s largest cryptocurrency.
The Numbers Paint a Grim Picture
To fully appreciate the scale of this downturn, it helps to look at where Bitcoin was just a few months ago. Bitcoin had rallied strongly since Donald Trump’s election victory, soaring 44% from Election Day in November to a high of $109,115 on January 19. At that point, the mood in the crypto market was electric. Regulatory tailwinds, institutional inflows, and a crypto-friendly White House all seemed to be pointing toward a sustained bull run.
Nevertheless, as February wore on, that excitement evaporated. Recent losses have partly erased those gains as the so-called Trump trade loses steam, with macroeconomic uncertainty and a $1.5 billion crypto exchange hack contributing to the pullback among investors. Furthermore, Bitcoin dropped below $80,000 for the first time in 2026, a psychological blow that rattled traders and long-term holders alike.
The flagship cryptocurrency finished February down around 19%, after a broader risk-off move knocked it to a three-month low and put it more than 25% off its record high. Additionally, on-chain data revealed the depth of the damage. Over a three-day stretch, about $1 billion in realized losses were recorded daily, the most since August’s yen carry trade unwind when Bitcoin fell to $49,000.
For context, a whopping $1.1 trillion was wiped off the crypto market cap during this period, taking the total to $2.59 trillion.
What Is Driving the Sell-Off?
Several forces are converging to push Bitcoin lower, and understanding each one matters for making sense of the broader picture.
First and foremost, tariffs are playing a major role. Nic Puckrin, financial analyst and founder of the Coin Bureau, noted that the sharp sell-off in crypto on renewed tariff fears shows that Bitcoin and even altcoins are now entirely driven by politics. Interestingly, this was never the intention for Bitcoin, which was designed as an anti-political asset. Yet here we are, watching Bitcoin trade like a leveraged tech stock rather than digital gold.
Beyond tariffs, macroeconomic headwinds are piling up. David Duong, head of institutional research at Coinbase, explained that crypto markets are in a fragile state partly because of the macro environment, with concerns surrounding tariffs now fully being priced in alongside negative survey data, all contributing to worries around the U.S. growth story more broadly.
Moreover, Bitcoin has experienced its worst start to a year on record, falling 23% in the first 50 trading days of 2026. The cryptocurrency dropped 10% in January and an additional 15% in February, marking a potential first in history for two consecutive months of losses at the start of a year. That kind of performance cuts deep, especially given how much optimism surrounded Bitcoin heading into 2026.
Equally important is the role of leverage. When prices drop sharply, leveraged positions get liquidated, which in turn accelerates the downward pressure. Bitwise’s Jonathan Man estimated that more than $20 billion was liquidated in a single day, including a one-hour 13% Bitcoin drop and sharp rebounds from extreme lows, with roughly $65 billion in open interest wiped out. Those kinds of liquidations create cascading effects that are very difficult to arrest in the short term.
Bitcoin ETFs Feel the Heat
The spot Bitcoin ETF market, which launched in early 2024 and was hailed as a watershed moment for institutional adoption, is now showing signs of stress. After months of consistent inflows that pushed Bitcoin to record highs, the tide has clearly turned.
According to SoSoValue data, spot Bitcoin ETFs recorded a total net outflow of $133.27 million on February 18 alone, led by BlackRock’s iShares Bitcoin Trust (IBIT), which posted $84.19 million in outflows, while Fidelity’s Wise Origin Bitcoin Fund (FBTC) saw $49.07 million exit the fund.
That said, the situation is not entirely catastrophic for the ETF space. Despite the outflows, Bitcoin ETFs still hold $83.6 billion in net assets, representing about 6.3% of Bitcoin’s market cap. Still, the trend is worrying. If outflows persist through the final days of the week, it could mark Bitcoin ETFs’ first five-week straight outflow streak since March of last year.
Institutional investors, it seems, are trimming rather than accumulating. That shift in behavior reflects a broader recalibration of risk tolerance in a market where macroeconomic variables are calling the shots more than crypto-specific fundamentals.
Source: ZyCrypto | CoinDesk ETF Report
Ethereum Joins the Downtrend
Bitcoin is not alone in feeling the pressure. Ethereum, the second-largest cryptocurrency by market cap, has also had a rough February. Its ETF products are mirroring the same outflow pattern, and the asset has struggled to hold key price levels.
U.S. Ethereum spot ETFs recorded $41.8 million in net outflows on February 18, with BlackRock’s ETHA losing nearly $30 million. Total net assets across ether funds sit at $11.1 billion, about 4.8% of Ethereum’s market cap. The steady bleed comes as ether trades below $2,000 and struggles to build momentum.
The Ethereum situation is in some ways even more disheartening than Bitcoin’s, given how much anticipation surrounded its ETF launch. However, with the broader market under pressure and investors pulling back from risk assets generally, Ethereum is caught in the same current dragging everything else down.
Solana and XRP Defy the Trend
Here is where the story gets genuinely interesting. While Bitcoin and Ethereum ETFs are seeing consistent outflows, some newer crypto ETF products are actually recording inflows. Solana, in particular, is standing out as a bright spot in an otherwise bleak market.
Solana spot ETFs bucked the trend with $2.4 million in net inflows, suggesting investors are rotating within crypto rather than exiting the asset class amid macro uncertainty. Furthermore, with nearly $880 million in cumulative inflows, Solana ETFs have gained attention despite the broader risk-off environment in the crypto market, with Bitwise’s BSOL leading the charge by adding $1.5 million in fresh capital.
The inflows are relatively modest in dollar terms compared to the outflows hitting Bitcoin, but they carry an important symbolic weight. They suggest that investors are not abandoning the crypto space altogether. Instead, they are becoming more selective about where they place their bets.
The divergence suggests investor confidence is becoming increasingly selective, with capital rotating toward XRP and Solana exposure even as funds continue to exit Bitcoin and Ethereum products. In other words, the market is not in full panic mode. Rather, it is in a phase of rotation, where capital is shifting toward assets that traders believe offer better risk-adjusted opportunities at current price levels.
XRP’s situation is more nuanced. While some weekly data showed XRP ETFs attracting capital, on February 18, XRP ETFs slipped into negative territory, posting $2.2 million in daily outflows, with total net assets across XRP funds at just over $1 billion, or roughly 1.2% of XRP’s market cap. Therefore, XRP sits somewhere in the middle of this ETF flow picture, with its momentum shifting from week to week depending on market conditions.
Source: CoinCentral | CCN
The Bigger Rotation Story
The divergence between Bitcoin, Ethereum, and newer assets like Solana tells us something important about how the crypto market is maturing. Early in the ETF era, money flowed almost exclusively into Bitcoin and, to a lesser degree, Ethereum. These were the safe bets, the blue chips of crypto. However, as institutional investors grow more comfortable navigating the space, they are beginning to allocate more deliberately across different assets.
With macroeconomic uncertainty lingering and the dollar firming, ETF flows offer a real-time read on where institutional conviction remains and where it is fading. Currently, that conviction is shifting. Bitcoin is still the dominant asset by a wide margin, but the monopoly on institutional interest is clearly loosening.
Furthermore, the inflows into Solana ETFs, while modest in absolute terms, indicate a shift toward specific assets rather than a broad market-wide retreat, with Solana’s ability to stand out amid this period of market caution highlighting its growing appeal to institutional investors.
This kind of selective accumulation is actually a healthy sign for the crypto market’s long-term development, even if it is painful for Bitcoin holders in the short term.
Looking at the Road Ahead for Bitcoin
Despite the brutal February performance, not everyone is ready to write off Bitcoin. Long-term bulls point to historical patterns and structural tailwinds as reasons to stay the course.
Analysts note that Bitcoin’s average return for March has historically been 13%, though it has finished March in the green in just six of the last 12 years, and it has not seen a March loss since 2020. Consequently, there is at least some statistical basis for optimism as February closes out.
Moreover, the regulatory environment remains constructive. In February alone, the SEC ended its enforcement case against Coinbase, closed its investigations into Robinhood’s crypto unit, Uniswap, Gemini, and Consensys with no enforcement action, scaled back its crypto enforcement unit, and issued a statement clarifying that meme coins are not securities. Those are genuinely positive developments that should, in theory, provide a supportive backdrop for Bitcoin over the medium term.
Analysts at H.C. Wainwright noted that macro factors will continue to be the biggest driver of digital asset price performance over the short term. So, even with favorable regulatory winds at its back, Bitcoin is still vulnerable to the broader economic environment. Investors will be watching the February consumer price report and the Federal Reserve’s upcoming policy meeting closely for any signals that could shift the macro picture.
The continued weakness in Bitcoin’s performance is notable given historical patterns surrounding post-U.S. presidential election years, which typically outperform, raising concerns among investors and market analysts.
Key Takeaways for Crypto Investors
The February 2026 downturn carries a few lessons worth sitting with. For one, Bitcoin is increasingly correlated with traditional risk assets. The idea of Bitcoin as a non-correlated hedge has taken another hit this month. Second, institutional money moves with macroeconomic sentiment, and when fear dominates markets, even fundamentally strong assets like Bitcoin get sold off. Third, the ETF landscape is evolving, and capital is beginning to rotate toward newer crypto products in a way that reflects growing sophistication among institutional players.
Additionally, the sheer scale of realized losses, billions of dollars across just a few days, serves as a reminder that volatility is still Bitcoin’s defining characteristic regardless of how far institutional adoption has come. Bitcoin remains a high-conviction, high-volatility asset, and February 2026 has reinforced that reality in no uncertain terms.
Finally, Solana’s resilience during this period is a data point worth noting. While it is too early to draw sweeping conclusions, the consistent ETF inflows into Solana products during a period of broader market stress suggest that investors see genuine value in the asset’s fundamentals and growing ecosystem.
Sources and Further Reading:
- Bloomberg: Bitcoin Heads for Worst Month Since June 2022
- CNBC: Bitcoin Closes Out Its Worst Month Since 2022
- CoinDesk: Bitcoin Set for Worst Month Since June 2022
- CoinDesk: Bitcoin, Ether, XRP ETFs Bleed While Solana Bucks Outflow Trend
- Yahoo Finance: Bitcoin Falls Nearly 17% in February
- ZyCrypto: Bitcoin, Ether, and XRP ETFs Post Outflows While Solana Funds Gain
- CCN: Bitcoin and Ethereum ETFs See Outflows While Solana and XRP Record Largest Inflow
- CoinCentral: Solana ETFs Post Inflows as Bitcoin, Ether, XRP Suffer Outflows
- Phemex News: Bitcoin Records Worst Start to Year With 23% Decline in 2026
