Summary Bitcoin has experienced a severe drawdown, falling from ~$126,000 to ~$70,000, with sentiment at extreme fear levels. BTC's 'digital gold' narrative is under pressure as it now behaves more like a risk-on asset, underperforming the NASDAQ since November. Despite heavy losses and balance sheet strain, the Bitcoin network remains functional, and institutional interest persists. With no single catalyst for the decline and historical precedent for recovery, I rate FBTC as a hold amid ongoing market maturation. Introduction All but the most reclusive investors are likely aware of crypto’s dramatic crash over the last six months, going from an ATH of around $126,000 to a current level of around $70,000, having hit an interim low of around $60,000. The story has featured in financial headlines across the globe, causing significant discomfort among both institutional and retail holders. After five red monthly candles in a row, let’s examine whether Bitcoin and tracker ETFs like Fidelity Wise Origin Bitcoin Fund ( FBTC ) can regain their footing in 2026. FBTC And What Institutionalization Actually Looks Like The emergence of multiple Bitcoin ETFs in recent years shows how far crypto has moved into the traditional financial system. The Fidelity Wise Origin Bitcoin Fund is one example, offered by one of the largest asset managers in the world and structured like any other exchange-traded fund that investors can access through a standard brokerage account. With just over $13.3 billion in assets under management , FBTC is one of the largest Bitcoin ETFs. It has a relatively low expense ratio of 0.25% and typically trades very close to NAV. According to TradingView, the fund is currently trading at a premium of 0.03% to the underlying. From January 1 through February 11, FBTC has seen roughly $1.08 billion in net outflows . Institutional access has not insulated Bitcoin from volatility. Year-to-date outflows show that ETF investors have also been reducing exposure during the drawdown. Institutionalization has broadened access, but it has not prevented selling pressure. Blood On The Streets Crypto sentiment has gone from caution to capitulation. The CMC Fear and Greed Index is showing extreme fear with a reading of 8/100 for the worst snapshot since 2022. The index uses factors like trading volume, volatility, market cap, social media sentiment, and Google Trends. Corporate balance sheets tied to Bitcoin and the mining sector now show visible strain. Strategy Inc. ( MSTR ) reported a net loss attributable to common shareholders of $12.6 billion, compared with a loss of about $671 million a year earlier. Importantly, this is a mark-to-market loss. Executive Chairman Michael Saylor does not appear overly worried. In his words: HODL. The truly scary part is that no one seems to know exactly what is causing the rout. Different ideas have been put forward, including the appointment of new Federal Reserve Chair Kevin Warsh, rumblings in the metals markets, and geopolitical upheaval, but none of these factors can on their own explain how the market gave up so much in gains so quickly. Rare But Not Unique: Lessons From 2011 And 2018 Five red monthly candles in a row is rare, but it’s happened before. In 2011, Bitcoin suffered an early-market collapse with thin liquidity, an immature market structure, and a violent and volatile price discovery process. The main catalyst was a security breach at Mt. Gox, when a hacker stole about 25,000 Bitcoins from user accounts. Due to the thin liquidity base, a failure at the largest exchange at the time led to a systemic price collapse. The 2018 crash appeared to have had no single defining catalyst, although increased regulation, KYC procedures, and AML requirements set the stage . After a spectacular run in 2017, starting at around $1,000 and hitting nearly $20,000 by the end of the year, things came crashing down in the following year. By the end of 2018, Bitcoin was trading below $4,000. At the same time, crypto was receiving increasing institutional interest and began to start trading more in line with broader financial markets. As the market matured, downturns no longer looked like total collapse and more like stagnation and a waiting game. Digital Gold Narrative Under Pressure For several years, Bitcoin has been described as a kind of ‘digital gold.’ This is rather a broad statement, and we should unpack the assumptions behind it. Gold has intrinsic use cases and has historically, and by historically we’re talking millennia, acted as a store of value. If Bitcoin indeed ever traded like the digital version of gold, this is no longer the case under the current regime . While gold continues to act as a hedge and safe haven during times of insecurity, Bitcoin is now acting more like a risk-on asset. In fact, BTC has underperformed the NASDAQ since November last year. TradingView According to Bitwise’s Head of Europe, Bitcoin is becoming more of a risk asset as it matures. In his view, gold is the better cushion for falling markets , while Bitcoin boosts returns during bull markets. As the importance of halving diminishes, with most of the 21 million Bitcoin to ever exist already on the market, BTC is being increasingly driven by ETF inflows and treasury purchases. It is not yet clear whether this explains risk-asset behavior or contradicts it. Cautious Optimism For 2026 The market is not yet showing signs of recovery, but patterns that precede recovery are starting to emerge. Much financial and emotional damage has already been done, and while this does not guarantee or even signal a bottom, it reduces downside risk. Just like in 2018, there is no single clear catalyst for the massive drop, and as institutional adoption increases, the maturity thesis cuts both ways. If BTC is indeed a risk-on asset, it stands to benefit disproportionately from a risk-on turn in market sentiment. While proxy vehicles, miners, and balance sheets are under pressure, the network is functioning. Bitcoin hasn’t gone to zero, miners and treasuries are not going out of business en masse, and institutional interest remains strong despite significant headwinds. Institutional adoption does not stop a drawdown. However, it changes who is left holding the pieces after the smoke clears. A large part of this selloff appears tied to leveraged trades, mining equities, and other proxy vehicles that are forced to sell or get margin called when volatility spikes. ETF investors and corporate treasuries behave differently. They are generally slower and less leverage-driven. They do not step in to defend price during panic, but once forced selling fades, they can absorb supply more steadily than in earlier cycles. The cautious optimism for 2026 does not come from sentiment but from the idea that, after deleveraging runs its course, Bitcoin may have a broader and more durable buyer base than it did after prior drawdowns. Conclusion There is no doubt that the last six months have been a test of crypto investors’ endurance. However, similar crashes have happened in the past. Bitcoin’s current drawdown is not defined by a single shock, nor by a failure of the network itself. Sentiment has broken down, leverage is under significant pressure, and the long-term narrative of digital gold is being questioned. At the same time, Bitcoin is increasingly embedded in the traditional financial system through spot vehicles such as FBTC. That broadens the ownership base, but it does not eliminate volatility. For now, FBTC is a hold.
