📌 TOPINDIATOURS Update crypto: Institutional Investors Retreat From Bitcoin Amid G
Crypto hedge funds are sharply pulling back from the market, raising cash levels as risk appetite deteriorates across digital assets.
The move away from the market comes as experts suggest Bitcoin (BTC) is facing an “identity crisis.”
Institutional Retreat From Bitcoin Accelerates
Major crypto hedge funds have shifted their portfolios in early 2026. According to Nic Puckrin, co-founder of Coin Bureau, the average cash balance has risen to levels not seen since early 2025.
Furthermore, for the first time, some crypto hedge funds report zero exposure to both Bitcoin and Ethereum, assets that traditionally made up the core of institutional crypto portfolios. This marks a fundamental reassessment of digital asset strategies among professional money managers.
Crypto Hedge Fund Cash Balances. Source: X/Nicrypto
The analyst attributed the defensive stance to several factors:
Lower reward-to-risk: The current upside potential in Bitcoin and Ethereum appears limited relative to volatility and downside exposure, weakening the overall risk-adjusted return profile.
Unprofitable basis trade: A basis trade typically involves buying spot BTC and shorting BTC futures. When funding rates compress and futures premiums decline, the arbitrage yield becomes unattractive.
Shift toward crypto-linked equities: Some capital has rotated into publicly traded companies, offering indirect exposure through traditional equity markets.
Uncertain macroeconomic backdrop: Ongoing concerns around inflation, interest rates, and geopolitical risks are contributing to a broader risk-off stance in digital assets.
The slowdown in institutional demand is also reflected in flows into spot Bitcoin exchange-traded funds (ETFs). BeInCrypto reported that since the start of 2026, the funds have recorded nearly $4.5 billion in outflows.
This was only partially offset by just $1.8 billion in inflows during the first and third weeks of the year. Furthermore, since a record high in October, balances across spot Bitcoin ETFs have fallen by more than 100,000 BTC.
The price pressure has also weighed on corporate holders and miners. Recently, Bitcoin miner Bitdeer sold all its BTC holdings amid declining mining profitability.
A recent report from Matrixport points to early warning signs dating back to late 2025. Despite a price rally at the time, Bitcoin futures positions on CME Group remained significantly lower than levels typically associated with such price appreciation.
This divergence suggested that the rally was not driven by new institutional inflows, signaling weakening institutional conviction even before 2026 began.
📊Today’s #Matrixport Daily Chart – February 23, 2026 ⬇️
The shift away from Bitcoin comes as Bloomberg highlighted that the world’s largest cryptocurrency is facing a $1 trillion “identity crisis,” trading more than 40% below its recent peak.
“Washington has never been more accommodating. Institutional adoption has never been deeper…That means the defining struggle of this crypto era isn’t about price. It’s about purpose. And this selloff is forcing a question Bitcoin hasn’t needed to answer when prices were rising: if it isn’t the best hedge, the best payment rail or the best speculation — what, exactly, is it for?,” Bloomberg noted.
The key issue is that its three dominant narratives are simultaneously under pressure:
Digital gold (macro hedge)
Payment rail
Speculative asset
During recent macro uncertainty, investors rotated into traditional safe-haven assets instead. Gold-focused ETFs recorded strong inflows, while Bitcoin investment products saw capital exit. The divergence has raised questions about Bitcoin’s role as a reliable hedge against inflation or geopolitical stress.
In the payments space, stablecoins have gained traction as a more practical solution for cross-border transfers and dollar-linked transactions.
“If anything, stablecoin activity could be correlated with ac…
A group of cryptocurrency exchanges linked to Russia is helping users move funds outside the reach of Western financial restrictions, according to a report released Saturday by blockchain analytics firm Elliptic.
Key Takeaways:
Elliptic identified five Russia-linked crypto exchanges providing pathways to bypass Western sanctions.
Only one platform is formally sanctioned, yet several processed large transactions with restricted entities.
Activity has shifted across multiple services, suggesting enforcement actions redirect rather than halt flows.
The study identifies five trading platforms, most of them not formally sanctioned, that continue to provide channels for high-volume crypto transactions beyond the oversight of the traditional banking system.
The findings arrive as European officials consider tighter measures, including a potential blanket ban on crypto transactions involving Russia, amid concerns that new platforms are emerging to replace previously targeted operators.
Elliptic: Nearly 10% of Bitpapa Transactions Tied to Sanctioned Targets
Among the exchanges examined, only the peer-to-peer marketplace Bitpapa is under US sanctions.
The US Treasury’s Office of Foreign Assets Control (OFAC) designated the platform in March 2024 for alleged sanctions evasion.
Elliptic found that about 9.7% of Bitpapa’s outgoing transactions were linked to sanctioned entities and that the exchange frequently rotated wallet addresses to make monitoring more difficult.
The report also highlights ABCeX, an unsanctioned exchange operating from Moscow’s Federation Tower, the same building previously used by Garantex before US authorities seized its domains in March 2025.
Elliptic estimates ABCeX has processed at least $11 billion in crypto, with significant transfers flowing to Garantex and another exchange, Aifory Pro.
JUST IN: European Union proposes banning all crypto transactions with Russia to prevent sanctions evasion. pic.twitter.com/4FlGZJJorB
Another case involves Exmo, which said it exited the Russian market after the 2022 invasion of Ukraine by selling its regional operations to a separate entity, Exmo.me.
Elliptic’s analysis suggests operational ties remain: both services appear to share custodial infrastructure and pooled hot wallets.
The firm recorded more than $19.5 million in transactions between Exmo and sanctioned exchanges, including Garantex, Grinex and Chatex.
Rapira, registered in Georgia but maintaining a Moscow office, was also flagged after sending over $72 million directly to sanctioned exchange Grinex.
Authorities in Russia reportedly raided Rapira’s offices in late 2025 over suspected capital transfers to Dubai.
The fifth platform, Aifory Pro, operates cash-to-crypto services in Moscow, Dubai and Turkey.
The company reportedly offers virtual payment cards funded with USDT that allow Russian users to access services restricted by Western providers. Elliptic also traced nearly $2 million from Aifory Pro to the Iranian exchange Abantether.
Sanctions Shift Activity, Illicit Crypto Volume Hits Record High
Researchers say the network illustrates how enforcement actions can shift activity rather than eliminate it.
After the shutdown of Garantex, transaction volumes rose on other exchanges, according to data from multiple analytics firms.
Chainalysis reported that illicit crypto addresses received a record $154 billion in 2025, while TRM Labs produced a similar estimate of $158 billion.
As reported, Russia’s industrial crypto mining sector continued to expand in 2024, with the country’s two largest operators, BitRiver and Intelion, generating a combined $200 million in revenue and accounting for more than half of the legal market.
