The primary driver of the February 2026 crypto selloff isn't found on the blockchain, but in the Federal Reserve's latest economic projections.
With U.S. policy rates expected to drift toward the low 3% range by year-end, the "Higher for Longer" narrative is keeping liquidity tight. Inflation remains stubbornly above the 2% target, preventing the Fed from initiating the aggressive "insurance cuts" the market hoped for.
With Fed Chair Jerome Powell's term expiring in May 2026, markets are facing policy uncertainty. History shows that risk assets like Bitcoin often enter a period of high volatility during leadership transitions at the central bank.
The current downturn is putting immense pressure on corporate treasuries like MicroStrategy $MSTR , which recently "scooped up" more $BTC even as ETFs saw a two-week outflow of $1.5 billion.
We are moving into a "selective" phase of the bull run. The correlation with Gold (0.78) suggests that Bitcoin is currently being treated as a macro hedge rather than a speculative tech play. Expect range-bound trading until the March #FOMC meeting provides a clearer path for global liquidity.