This Week in Crypto: Bitcoin's Historic Worst Start, a $4.2B Tether Freeze, Circle's Earnings Bombshell, and the Axiom Insider Trading Scandal That Shook Platform Trust

The week of February 23–28, 2026 did not offer the crypto market a moment of rest. It opened with Bitcoin and Ethereum already recording their worst year-to-date performances in their respective histories, delivered a Circle earnings report that redefined what a regulated stablecoin company looks like at maturity, handed traders a 9% single-session Bitcoin spike that squeezed shorts without resolving the underlying market structure debate, exposed an alleged year-long insider trading scheme at one of Solana's most prominent trading platforms, saw Tether freeze a staggering $4.2 billion in crime-linked USDT in a disclosure that rewrites the stablecoin compliance narrative, and closed with a broader market still trapped between a demand floor that has held and a resistance ceiling that has not broken. For anyone who follows crypto with the seriousness it now demands as a multi-trillion-dollar asset class embedded in institutional portfolios, regulated exchange products and geopolitical finance, this was the week that sharpened every thesis — bullish and bearish alike.

The Macro Picture: Bitcoin's Worst Year-to-Date Performance on Record

The week began with a sobering milestone. Fortune confirmed on February 20 that Bitcoin was down approximately 24% year-to-date, trading near $67,000, while Ethereum had fallen roughly 34% from January 1 to approximately $2,000 — the worst year-to-date performance on record for both assets, according to Fortune's historical data. By February 25, CapitalStreetFX's daily market report showed Bitcoin's year-to-date decline had extended to 27%, with the asset having shed 50% from its October 2025 all-time high of $126,021. The Crypto Fear and Greed Index sat at a reading of 11 on February 25 — a level classified as Extreme Fear and one of the lowest sentiment readings in the current cycle.

The total crypto market capitalization stood at $2.44 trillion as of February 26, 2026, according to CoinMarketCap data cited by CapitalStreetFX, with 24-hour trading volume at $140.6 billion and Bitcoin dominance at 58.3%. That dominance figure tells an important story: capital has not rotated from Bitcoin into altcoins during the correction, as would typically be expected in a healthy bull market rotation. Instead, altcoins have bled faster and deeper than Bitcoin itself, with Ethereum down 34% YTD, Solana down approximately 35% in the 30 days to February 28, and most major Layer 1 and Layer 2 assets trading at 60% to 80% discounts from their cycle highs. Bitcoin's $8.72 billion options expiry on February 28 added further complexity, with the asset trading at $68,052 against a max pain level of $75,000 — meaning the majority of open options contracts were positioned for a higher price that did not materialize.

The Bitcoin Bounce: 9% Surge Toward $70,000 and What It Actually Means

Wednesday, February 26 delivered the week's most dramatic price event: Bitcoin surged approximately 9% intraday, peaking near $69,987 in its largest single-session gain in weeks. The mechanics were forensically clean. Aggregated Bitcoin perpetual futures open interest had declined to approximately 235,000 BTC from levels above 240,000 BTC — a reduction reflecting prior leverage liquidations. Funding rates had turned slightly negative at around minus 0.0037%, meaning short sellers were paying longs to maintain positions. When Nvidia's earnings beat triggered a broader risk-asset rally and Nasdaq gains exceeding 1%, spot buying absorbed available Bitcoin sell-side liquidity in thin order books, forcing shorts to cover in a cascade that amplified the underlying spot move into a near-double-digit spike.

Importantly, the $62,000 to $65,000 demand floor held for the third consecutive test in February — a structural pattern that Zerocap's weekly market wrap and Amber Group's market update both identified as evidence of genuine spot accumulation rather than purely short-covering. However, Bloomberg's February 25 analysis delivered a sobering counterpoint: approximately 45% of all Bitcoin in circulation is currently valued below the owner's cost basis, meaning nearly half of all BTC holders are underwater and systematically selling into every recovery attempt. This supply overhang directly explains why the 9% spike stalled below $70,000 rather than accelerating through it. The demand floor is real. The resistance ceiling is equally real.

Circle's Earnings Bombshell: The Stablecoin Sector's Coming-of-Age Moment

If one event this week defined the structural trajectory of regulated crypto finance, it was Circle Internet Group's Q4 2025 earnings release on February 25, 2026. The numbers were historic by any measure. Revenue of $770 million grew 77% year-over-year, surpassing analyst consensus of $747 million. Adjusted earnings per share of $0.43 demolished the $0.35 estimate. USDC in circulation reached $75.3 billion — up 72% year-over-year. On-chain USDC transaction volume in Q4 alone reached $11.9 trillion, a 247% increase from Q4 2024. For the full fiscal year 2025, Circle reported total revenue of $2.7 billion, up 64%, with Adjusted EBITDA of $582 million up 104%. Shares of NYSE-listed CRCL jumped approximately 12% to 14% in pre-market trading — an exceptional response for a fintech company reporting its second full-quarter earnings since its June 2025 IPO.

"Since our IPO and the passage of the GENIUS Act, we have seen a dramatic increase in engagement from major financial institutions across banking, payments, and capital markets. There is incredible interest in collaborating with us, including from notable firms that may be considering launching their own stablecoins."

— Jeremy Allaire, Chief Executive Officer, Circle Internet Group — Q4 2025 earnings commentary, February 25, 2026

The full-year net loss of $70 million — which initially appeared contradictory to the strong operational performance — was entirely explained by $424 million in one-time, non-cash stock-based compensation triggered by IPO-related vesting conditions that will not recur in 2026. The underlying business is strongly profitable. Circle's FY2026 guidance targets a 40% compound annual growth rate for USDC circulation — a forward commitment that, if met, would put USDC above $200 billion in circulation within three years and place Circle among the largest financial institutions in the digital economy by assets under management.

Tether Freezes $4.2 Billion in USDT — And the DoJ Seizes $61 Million in a Single Pig-Butchering Case

Thursday, February 27, 2026 brought the week's most consequential compliance story, and arguably the most significant stablecoin regulatory disclosure of the year. Tether confirmed in a statement reported by Reuters, U.S. News and FinanceFeeds that it has frozen a cumulative total of $4.2 billion in USDT since it began compliance-driven freezes — with $3.5 billion of that total frozen since January 2023 alone, indicating a dramatic and accelerating pace of enforcement cooperation. The same week, the U.S. Department of Justice announced it had seized $61 million in USDT directly linked to pig-butchering scam networks — sophisticated romance and investment fraud operations that have defrauded tens of thousands of victims globally — with Tether's cooperation identified as instrumental in identifying and freezing the wallets involved.

The disclosure positions Tether — previously the most frequently criticized stablecoin issuer for alleged compliance opacity — as what may now be the most operationally active financial crime prevention partner in the digital assets space. Tether's frozen funds have been linked to human trafficking networks, terrorism financing connected to conflicts in Israel and Ukraine, and large-scale fraud operations across Southeast Asia. For the GENIUS Act stablecoin legislation debate currently advancing through Congress, the Tether disclosure presents a complex picture: it demonstrates that centralized stablecoin issuers can function as powerful financial crime enforcement infrastructure, while simultaneously raising legitimate concerns about the civil liberties implications of a private company's unilateral ability to freeze billions of dollars in user funds without a court order.

ZachXBT vs. Axiom Exchange: The Insider Trading Investigation That Redefined Platform Trust

The week's most explosive investigative story broke on February 26, when blockchain investigator ZachXBT published a detailed accusation naming Broox Bauer, a New York-based senior business development employee at Axiom Exchange — a Y Combinator Winter 2025 cohort member with over $390 million in lifetime platform revenue. The alleged scheme: Bauer used Axiom's internal customer support dashboard to access private wallet data of prominent crypto key opinion leaders and traders, compiled their portfolios in shared Google Sheets within a private group, and executed trades positioned to profit from positions those wallets were about to take public. The alleged activity dates back to early 2025 — making it a year-long insider scheme, not a momentary lapse of judgment.

Axiom confirmed the core allegations within hours of ZachXBT's publication, stating it was "surprised and disappointed" that an employee had "abused internal customer support tools to look up user wallets," and confirming it had revoked access to the relevant dashboards. A related Polymarket prediction market generated over $30 million in trading volume before ZachXBT named Axiom publicly — raising secondary questions about information leakage around the investigation itself. The U.S. Attorney's Office for the Southern District of New York is identified as the probable jurisdiction if federal authorities pursue the case. The episode has triggered immediate industry conversation about data governance standards across every on-chain trading platform operating without the access controls that regulated financial institutions are legally required to maintain.

Grayscale Raises Cardano Above 20% — And Block Cuts 4,000 Jobs Citing AI

Two additional stories shaped the week's broader narrative. Grayscale Investments confirmed through its Smart Contract Fund disclosures that Cardano's ADA allocation had risen incrementally from 18.55% in early January 2026 to 20.20% as of February 23 — making ADA the fund's third-largest holding behind Solana at 28.61% and Ethereum at 28.21%. The allocation increase is driven primarily by the CoinDesk Smart Contract Platform Select Capped Index's rule-based rebalancing methodology rather than a discretionary bullish call, but it coincides with on-chain data showing whale accumulation of over 819 million ADA worth approximately $213 million during ADA's 67% price decline from prior cycle highs. ADA continues to trade near $0.28 with bearish technicals, but the convergence of mechanical institutional buying and genuine large-holder accumulation is generating significant analyst attention.

Jack Dorsey's Block Inc. delivered the week's most significant corporate restructuring news from the fintech-Bitcoin crossover space: the elimination of approximately 4,000 positions — roughly one-third of Block's global workforce — across its Square, Cash App, TBD and Spiral divisions. Dorsey attributed the decision directly to artificial intelligence's operational maturity, framing the cuts as the foundation of a leaner, AI-native company rather than a response to financial distress. With Cash App reporting 57 million monthly active users and $1.5 billion in gross profit in FY2024, the execution risk centers on whether AI-driven customer operations can maintain the service quality that has driven user growth without the human oversight structures being removed. Estimated annual savings of $600 million to $800 million from the workforce reduction represent a material step toward the operating leverage that Wall Street analysts have demanded for several consecutive earnings cycles.

Looking Ahead: What the Next Week Must Resolve

As the week closes, crypto markets sit at one of the most clearly defined technical and sentiment inflection points in the current cycle. Bitcoin must establish a daily close above $70,000 to $72,000 on strong volume before the structural bottom argument becomes credible rather than merely hopeful. The 45% of circulating BTC supply currently held at a loss represents a persistent supply overhang that will suppress rallies until those positions either capitulate into selling or are absorbed by stronger hands at current prices. Spot Bitcoin ETF flows — which have shown early stabilization signals with back-to-back inflow days totaling approximately $145 million — need to sustain inflows for multiple consecutive weeks before the institutional demand narrative recovers its conviction. The options market's max pain level at $75,000 for the February 28 expiry, versus Bitcoin's actual trading level near $68,000, tells the story of a market where positioning was wrong and where the reset process is not yet complete.

Ethers News Weekly Summary

The week of February 23–28, 2026 delivered Bitcoin at its worst year-to-date performance on record (down 27%, per CapitalStreetFX), total crypto market cap at $2.44 trillion with BTC dominance at 58.3%, and an Extreme Fear Index reading of 11. Circle's Q4 2025 earnings — $770 million revenue up 77%, $0.43 adjusted EPS versus $0.35 consensus, USDC at $75.3 billion up 72%, $11.9 trillion Q4 on-chain volume — triggered a 12–14% CRCL share move and validated the stablecoin institutional thesis. Tether confirmed $4.2 billion in frozen USDT over crime links, with the DoJ seizing $61 million in pig-butchering proceeds this week alone. ZachXBT exposed alleged year-long insider trading by a named Axiom Exchange employee; Axiom confirmed the breach. Bitcoin's 9% intraday spike on February 26 demonstrated the short-squeeze mechanics of a cleaned-up derivatives market but stalled below $70,000 resistance. Grayscale raised Cardano to 20.20% in its Smart Contract Fund via index rebalancing, coinciding with 819 million ADA in whale accumulation. Block Inc. cut 4,000 jobs citing AI, targeting $600–$800 million in annual savings.

This week crystallized the central tension of the current crypto cycle with unusual clarity. The fundamentals of digital finance infrastructure — stablecoin adoption at $11.9 trillion quarterly volume, institutional-grade regulatory frameworks advancing through Congress, Tether cooperating with the DoJ at a scale that would have been unthinkable two years ago — have never been stronger. The price action has never been more disconnected from those fundamentals in the short term. That disconnection has a specific, measurable cause: 45% of all circulating Bitcoin is held at a loss, and those underwater holders are selling into every bounce rather than holding through the correction. The structural resolution of that overhang — whether through capitulation, absorption by stronger hands, or a macro catalyst that shifts sentiment decisively — is the one variable that will determine whether this week's 9% Bitcoin spike was the beginning of the next chapter or another data point in the most extended consolidation of the current cycle. At Ethers News, we track every signal. This week gave us more of them than usual. The floor is visible. The ceiling is equally visible. What happens between them in the next fourteen days will matter more than any single headline we covered this week.