đŸ„Š The 3% wall holding Bitcoin back

PLUS: Institutions cap exposure over quantum and regulatory risks, Japan launches a $550B U.S. deal, stablecoin yield talks stall in Washington, and BlackRock takes 18% of ETH staking rewards.

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Cryptopolitan News
February 18, 2026 ‱ Estimated Reading Time: 10 minutes

Bitcoin is stuck. Institutions know why. And before two things change, no one is pulling the trigger.

The issue nobody wants to discuss

Bitcoin is trading around $67,000 to $68,000. That’s all good, until you recall that a couple of months ago it was at $126,000. That’s down 46% from the top, and the market isn’t coming back. It's just... sitting there.

Volume is decent. Volatility is low. And big money is sitting on the sidelines.

So what broke the momentum?

October changed everything.

The last time Bitcoin neared its all-time high, in October, it didn’t stick. $19 billion of leveraged bets were liquidated in a single session.

Altcoins got obliterated:80% to 90% loss all across the board. Most never recovered. But that crash didn’t just hurt stock portfolios. It has completely rewired institutions’ understanding of crypto.

Kevin O’Leary, a.k.a. “Mr. Wonderful” from Shark Tank, made it clear:

❝

Institutions finally did the math and realize if you want 90% of the upside and only 50% of the volatility risk in crypto, you buy Bitcoin and Ethereum.

He also reduced his own crypto holdings by 27 positions. He refers to what’s left as the “Two Girl Dance” - Bitcoin and Ethereum, and nothing else.

Large funds are doing very similar, very quietly.

Two risks leaving capital on the sidelines

Institutions aren’t just being careful around altcoins. There are two bigger things blocking serious money:

  1. Quantum computing:

    In theory, the encryption that underlies Bitcoin is vulnerable to attack by a sufficiently powerful quantum machine. That’s not a tomorrow issue, but it’s sufficient to have portfolio managers capping crypto exposure at about 3% until cleaner answers appear. Bitcoin developers have recently proposed a software change, called BIP-360, to close one of the possible backdoors. It's a start. But it's early.

  2. Regulation:

    The U.S. still has no sensible market-structure law for crypto. O’Leary thinks Congress will have something in place before the midterms. Until they see further, institutions aren’t going to go in big on an asset class that the government could decide needs massive reshaping overnight.

The 3% wall, and what's sitting behind it

O'Leary didn't just trim his portfolio. He put a number on exactly how cautious institutions have become.

Until the quantum threat has a credible fix and regulation has a clear shape, serious portfolio managers won't go above 3% crypto exposure. Full stop.

Three percent sounds small. But when BlackRock manages over $10 trillion in assets, a 3% cap means $300 billion in potential Bitcoin exposure. Add Vanguard, Fidelity, sovereign wealth funds and pension managers, and the number becomes almost incomprehensible.

Most of them aren't even close to 3% yet.

That's not the bear case. That's the bull case hiding in plain sight: a wall of capital ready to move the moment uncertainty clears. The quantum threat and regulatory limbo aren't just footnotes. They're the reason that wall stays up.

The takeaway

The October crash revealed how rickety leveraged crypto plays can get, outside of the top two assets. The quantum conversation is a reminder that not even the long-term fundamentals of Bitcoin are quite settled. And then there’s regulation, the wild card that could either open the floodgates, or close them.

And until both boxes are checked, Bitcoin remains in a range.

The rally is possible. The setup exists.

But policy and technology will have to catch up first, or the institutions writing these big checks will continue to wait.

POLL: What's holding you back from buying more Bitcoin right now?

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📊 Market Watch

đŸ‡ŻđŸ‡” Trump’s $550B Japan deal

Trump and Japanese Prime Minister Shinzo Abe signed off on a trade agreement that makes good on an April handshake deal between the two leaders.

It's not a handshake anymore. Japan announced last week that it has begun the first of its billions of dollars in investment to flow into the United States as part of Trump’s $550 billion trade pledge, and already Trump is touting three projects: oil and gas in Texas, power generation in Ohio, critical minerals in Georgia.

The Ohio gas plant is being promoted as one of the worlds largest. The Gulf LNG plant is intended to increase exports. The project is suggested as a way for the United States to finally break free from foreign dependence upon foreign supply of Georgia minerals.

The timing matters. Japan’s exports surged 16.8% in January: the fastest pace since 2022, and the Nikkei rose a further 0.9%. But shipments to the United States actually dropped 5%. The deal looks good on paper. The trade figures, however, remain complicated.

đŸ’” The stablecoin battle that’s holding up all of crypto regulation

Another emergency meeting at the White House will be held because banks and crypto companies still can’t decide: should stablecoin holders earn interest?

Banks say yes kills their business. Standard Chartered warns US banks could lose $500B by 2028 if consumers follow yields in stablecoins. Ban the rewards, the crypto companies say, and users will simply migrate to unregulated alternatives that are much riskier.

Until this issue gets resolved, the full Digital Asset Market Clarity Act remains at a standstill as well. One yield question is standing in the way of getting an entire regulatory infrastructure.

đŸ§Ÿ Trump: Your tax refund is about to get much bigger

Trump is already promising that refunds will be 20% higher than they would have been otherwise when Americans file their 2025 returns next spring: paved by Trump’s One Big Beautiful Bill that wipes out federal taxes on tips, overtime and Social Security benefits a new car-loan interest deduction.

In another bad omen for tax increases, the Trump-era tax cuts have been extended in perpetuity, meaning taxpayers now have some breathing room across the board.

The catch: The Congressional Budget Office estimates the package would add $3.3 trillion to the federal deficit over a decade. More back now, more bill later.

 đŸ„ Top tweets

Did you know?

Here’s the math: The new iShares Staked Ethereum Trust (ticker: ETHB) is forecast to generate 2.8% a year. BlackRock and Coinbase share 18% of those staking rewards. Shareholders retain the other 82 percent, and they do so in exchange for an annual expense fee of 0.12 percent to 0.25 percent on top of that invested money.

So why would anyone buy it?

Staking Ethereum directly, after all, requires 32 ETH: about $85,000 at current prices as well as a crypto wallet and the technical setup and intestinal fortitude to manage it yourself. ETHB allows you to earn staking yield from a regular brokerage account, just as if you were buying a stock. No wallet. No keys. No chance you’ll lock yourself out for good.

It also operates inside IRAs and 401(k)s, includes built-in tax reporting and resides within the regulated financial system. For the institutions that have compliance boxes to check, that alone might make it worth doing.

The tradeoff is real though. An investor who is crypto native and staking ETH directly earns 100% of rewards. ETHB is like Ethereum with training wheels: a little expensive ones, but good ones for the right person.

BlackRock isn't alone either. VanEck has submitted a similar product, and Grayscale already provides staking returns for its Ethereum ETFs.

But here’s the tension no one is shouting about loud enough: In the same week that BlackRock debuted ETHB, Ethereum co-founder Vitalik Buterin warned that increasing Wall Street influence in Ethereum threatens to centralize a network designed from its genesis to be decentralized.

Institutions are leveraging easier access to Ethereum. Ethereum could be receiving fewer Ethereum in exchange.

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