Weekly: Between Fear and Opportunity

Last week, our founder, Evgeny Gokhberg, joined Raoul Pal on Inside a DeFi Hedge Fund: Risk Management in a 24/7 Market to discuss the principles underpinning our market-neutral yield strategies. The conversation explored active smart contract risk oversight, dynamic multi-chain capital allocation, and the structural considerations required to manage risk in continuously operating digital asset markets.

They also examined current market conditions, assessing whether the recent drawdown reflects cyclical liquidity stress or signals deeper structural fragility. The episode offers a considered perspective on risk management, capital efficiency, and evolving market structure within digital assets.

The full conversation is available to watch on YouTube and stream on Spotify.

Weekly Summary

We cover:

• Market update

• Seasonality frameworks

• Relative strength signals

Between Fear and Opportunity

Market Overview

Crypto markets were marginally down last week (-1.7%) after recovering +15% off the yearly lows.

Overall, it feels we are in consolidation mode, digesting the recent volatility. Notably, we have yet to re-test the 200W MA for global market capitalisation and Bitcoin.

Bitcoin Price Structure

BTC has been unable to make meaningful ground >$70k, trading at ~$68k in what seems like a mini consolidation pattern in which we may see some more directional conviction in the near-term.

We can see that the impact of ETF net fund flows across all assets has had an impact on valuations.

ETF net fund flows has arguably been leading Bitcoin prices since August and suggest a bottoming out at ~$60k (for now).

Sentiment & Positioning

Valuations have fallen so low, 2026 has been the worst start for sentiment since the Fear & Greed Index began.

And the average sentiment score for Feb 2026 is (so far) the lowest month ever recorded in the history of the index (10.6), surpassing the FTX collapse, Terra/Luna collapse, and March covid crash by meaningful margins.

If we ignore the absolute calendar dates and align to a recurring seasons reference zone (July-June), then we can start to see recovery in bear markets tend to form around the month of March.

Note, starting in July allows us to match dates that start with seasonal weakness (low trading volume, reduced flows).

This may help to explain why we see strong cluster of bids at the $60k level - investors are keen to get in at these levels in anticipation of a more sustained recovery.

The next strong area are the 2024 lows of ~$55k.

Macro Ratios and Correlations

As crypto markets could now be in a bottoming process, we’re watching crypto’s ability to outperform precious metals. The BTC/Gold ratio has put in deMark ‘count 13’ (green) on the weekly timeframe indicating strong seller exhaustion. These more rare counts can help identify local bottoms.

Finally, given everyone and their grandma is now talking about crypto correlations with software, we could be seeing early signs of a bottoming pattern emerge with indices like IGV.

Macro headlines remained active last week, with inflation data and rate expectations continuing to dominate traditional markets.

However, Bitcoin showed limited sensitivity to these developments, suggesting that improving expectations for future rate cuts are already priced in.

The muted reaction reinforces the view that BTC may currently be driven more by alternative factors — notably ETF flows, positioning dynamics, US domestic liquidity, and its evolving correlation with software and growth-oriented equities — rather than macro data alone.

Closing Remarks

Overall, positioning, sentiment extremes, and structural flow dynamics suggest markets may be transitioning into a bottoming phase.

Confirmation will likely depend on sustained ETF inflows, relative strength versus macro assets, and a decisive move out of current consolidation ranges.

About Re7

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