February 2026

Bitcoin fell 52% from its October 2025 all-time high near $126,000, breaking below $60,000 on February 6. The first weekend of the month - now referred to as "Black Sunday II" - produced $2.56 billion in liquidations alone. On February 5, realized losses across the market reached approximately $3.2 billion in a single day.

The strategy returned +0.95% net. All 18 active trading days closed positive.

That number deserves context.

01 / Performance

February was our quietest month since inception. Activity was minimal - the lowest of any month in the strategy's operating history. The system operated at a fraction of its normal capacity for the entire period.

This was not a failure. It was design.

The system did not chase. It waited. As volatility began to stabilize in the second half of the month, isolated opportunities appeared and were engaged selectively. But February was not an environment designed for aggressive deployment.

All returns are reported net of commissions and funding costs.

02 / Market Structure

The crash was not a single event. It was a compounding sequence.

It began with disappointing Microsoft earnings triggering a broad tech equity selloff. Institutional spot Bitcoin ETF outflows - exceeding $3 billion across January - removed a critical source of buying pressure entering the month. AI-adjacent crypto miners, pursuing high-performance computing buildouts, were simultaneously forced to liquidate Bitcoin holdings as financing conditions tightened. This created persistent selling pressure that was entirely disconnected from derivatives positioning.

These factors fed into each other. BTC futures open interest collapsed from approximately $61 billion to $49 billion within days - a 20% decline in notional exposure. Bitcoin lost 19% in a single week and fell below $63,000 for the first time in 16 months.

Here is the distinction that matters for understanding our positioning: the dislocations during the acute phase of this correction were directionally persistent. They were not the short-lived, violent, mechanically-resolved events that characterize our operating environment. When forced selling becomes continuous rather than episodic, the aftermath does not resolve in the way the system requires.

The system recognized this. It stood down.

One notable feature of February was the persistence of directional flow. In most months, positioning imbalances resolve relatively quickly and create localized inefficiencies. During February, those imbalances remained one-sided for extended periods, reducing both the frequency and quality of available setups. Historically, these environments have tended to be temporary, but they provide a useful reminder that opportunity availability - not market volatility alone - is what ultimately drives deployment.

03 / Risk & Execution

Maximum drawdown was zero throughout the period. No peak-to-trough decline was recorded at any point. Leverage remained at its lowest operating threshold.

The system does not force activity to generate returns in conditions where its edge is absent. When the structural features it relies on are temporarily overwhelmed by sustained directional flow, it contracts. Capital preservation takes precedence over compounding.

This is not a decision I make. It is a property of the system itself. The same thresholds that increase activity in January reduce it in February.

04 / Looking Ahead

February produced the lowest monthly return since inception. Given the market environment, we view that outcome positively.

The strategy preserved capital and returned positive every single day it was active. It did so by doing less, not more.

The conditions that drive the strategy's performance did not disappear in February. They were temporarily overwhelmed. Leverage rebuilds. Positioning reconstitutes. The structural architecture of perpetual futures markets - the funding mechanics, the liquidation engines, the fragmented liquidity - does not change because of a single deleveraging event.

As those conditions normalize, so does the opportunity set.

The system continues to operate within all defined parameters.