February was marked by continued volatility in both traditional and digital markets. The month began as an extension of the decline seen at the end of January, following the announcement of Kevin Warsh as the new Chairman of the Federal Reserve.
Throughout the month, political developments in Japan, a ruling by the U.S. Supreme Court on import tariffs, and—on the final day of February—a sudden escalation between the United States and Iran introduced renewed uncertainty.
The crypto market has experienced significant declines in recent months, with several indicators reaching historically low levels. Notably, however, Bitcoin has shown relative strength since the escalation of the conflict. While traditional assets came under further pressure, the crypto market began to show signs of stabilization.
On the final day of February, the simmering conflict between the United States, Israel and Iran escalated abruptly. Mutual missile strikes followed, with the U.S. and Israel primarily targeting sites in Iran, while Iran carried out retaliatory strikes on Israeli and American military bases in the region.
The timing came as a surprise, as both parties had agreed to resume technical discussions in Vienna in early March. President Trump publicly adopted a hard stance toward the Iranian regime, further increasing geopolitical tensions.
What stands out is the market reaction since the escalation. While the crypto market declined significantly in the lead-up to the conflict, the sector is now showing relative strength. Since the start of the missile exchanges, the S&P 500 is down -2%, gold -5%, while Bitcoin has risen +3%—a contrast that historically has rarely been observed during periods of global uncertainty. This suggests that the crypto market had already priced in much of the escalation.
The long-awaited market structure legislation for digital assets has reached a crucial phase. The biggest obstacle currently lies with the Senate Banking Committee, where the debate around stablecoin rewards between platforms such as Coinbase and traditional banks has stalled. Until a compromise is reached, further progress remains uncertain.
However, both sides have political and economic incentives to find a solution. Timing will be critical: ideally, a new iteration will take place no later than March in order to finalize the legislation before the midterm elections in November 2026.
For the crypto industry, this legislation represents a fundamental building block toward mass adoption. The world’s largest companies have expressed ambitions to integrate blockchain technology, but require clear regulatory frameworks before doing so at scale. Market structure legislation is expected to provide this legal certainty.
The past five months have brought significant declines, with several indicators reaching historically low levels. Such levels are more commonly seen in the later phases of market corrections. Since the escalation of the U.S.–Iran conflict at the end of February, however, the market has behaved more constructively, with Bitcoin showing strength relative to traditional assets.
Whether the negative sentiment is definitively behind us remains uncertain. A key point of attention is the potential impact on oil and inflation. If tensions in and around the Strait of Hormuz persist, inflationary pressures could increase over time. Higher inflation generally implies tighter monetary policy, which historically has not been favorable for risk assets.
An important observation is that the fundamentals of the companies in which the fund invests have largely remained intact. Revenue growth, user adoption and product development are stable or even improving. The discrepancy between price performance and fundamental progress has therefore widened, bringing several indicators such as price-earnings ratios to attractive levels.
Market structure legislation remains an important focus point. Although delayed, both sides have incentives to reach a compromise. This regulation forms a fundamental building block for mass adoption and provides the legal certainty that the world’s largest companies require for large-scale blockchain integration.
For investors with a long-term perspective, this phase may offer a moment to reassess positioning. Fortera’s funds are strategically navigating the current market volatility. With promising fundamentals and attractive valuations, the funds are well positioned to benefit from recovery as sentiment improves.
Are you curious about the possibilities for your investment portfolio? Discover how our strategies navigate through this dynamic market.
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