One Month Later – We Made it

When I wrote to you on February 5th, I called it “Crypto’s Winter of Discontent.” Bitcoin was hemorrhaging, fear was at levels I’d never seen, and I told you to stay tied to the mast. I meant it. I also told you I was putting new money into the market every single day, primarily in small-caps, AI-focused blockchain, and beaten-down DePIN names. I have continued doing exactly that.

So what has changed in the four weeks since? Quite a lot, actually, and almost all of it is constructive.

The Fear Hit a Record, Then Started to Fade

The day after I sent that letter, on February 6th, the Crypto Fear & Greed Index hit an all-time record low of 5 out of 100. To put that in perspective: during the FTX collapse it was 11. During the Terra/Luna meltdown it was 6. During the COVID crash it read 10. A reading of 5 was literally the most frightened moment in the recorded history of crypto.

That same day, Bitcoin (now at $72,000) touched $60,062, down roughly 52% from its October 2025 high of $126,000. Total crypto market cap dropped from $4.38 trillion to around $2.2 trillion. Leverage was obliterated: $2.7 billion in futures liquidations in a single 24-hour period. Total leverage in Bitcoin futures fell from $45.5 billion to $21.7 billion. In plain English: the speculative froth didn’t just get trimmed. It got incinerated.

But here’s the thing about maximum fear: it is almost always the worst time to sell and the best time to buy. Every single prior reading below 10 on this index has preceded a significant recovery. Every one.

As I write this The Fear & Greed Index has recovered to about 15, still deep in “Extreme Fear” territory, but trending in the right direction. The speculative excess is gone. Institutional ETF buyers came back in force on February 25th, adding roughly 21,000 BTC ($1.45 billion) in a single day, the first major institutional accumulation wave since mid-October 2025. Wallets holding 100+ BTC are approaching 20,000, historically an accumulation-phase signal.

The floor is formed, the setup is textbook.

The CLARITY Act: Washington Is Finally Coming Through

In my February letter, I talked about Wall Street already building the infrastructure: ETFs, tokenized deposits, futures, perpetuals, prediction markets. I said the money was coming. The missing piece has always been the law. That is now closer than it has ever been.

Let me walk you through what’s happened on Capitol Hill since I wrote:

January 21: The Senate Agriculture Committee advanced the Digital Commodity Intermediaries Act (their companion to the House CLARITY Act) by a 12 to 11 vote, the first time any crypto market structure bill has cleared a Senate committee. Ever.

January 29: In a historic first, the SEC and CFTC held a joint “harmonization” event announcing “Project Crypto,” a coordinated approach to regulation. Both agency chairs publicly declared that “most crypto assets trading today are not securities” and stated the era of enforcement-only crypto policy is “over at the federal level.” Read that sentence again. This is not a crypto person saying this. These are the heads of the SEC and CFTC.

February 13: Treasury Secretary Bessent called for Congress to pass the CLARITY Act this spring, citing midterm election urgency. Trump has twice now called for the bills passage.

February 25–26: Senate Democrats met to discuss advancing the bill. a16z’s Marc Andreessen and Chris Dixon briefed Senate Republicans. The Senate Banking Committee held a hearing where Chairman Tim Scott noted deposit flight fears from stablecoins “do not seem to be realized, whatsoever.” The odds are getting real. Coinbase CEO Brian Armstrong puts the chances at 90% by end of April. Prediction markets sit around 62–64%. JPMorgan’s crypto team calls a mid-year passage the catalyst that could trigger a “major H2 2026 recovery.” Their words, not mine. This matters a lot because the CLARITY Act resolves the single biggest barrier to institutional crypto investment: nobody knows which regulator is in charge. Once that’s settled, once pension funds, asset managers, and bank platforms have compliance cover, the capital that’s been sitting on the sidelines floods in. Not gradually. All at once. We saw what happened when Bitcoin ETFs launched in January 2024. CLARITY will be that, times ten, applied across every token that meets the decentralization threshold. And here’s the key: we believe the assets most affected by CLARITY are exactly the kind of assets our Small Coin Strategy and Decentralized AI Strategy hold. Small, fundamentally sound projects that institutional capital has been barred from touching. When the floodgates open, these are the first assets to be repriced.

Small Coins: Generational Value After a Generational Selloff

Let me revisit Helium, which I mentioned in February. This project saw user and revenue growth of 600–700% in 2025. As of February 5th, when I wrote, HNT was trading around $0.89. It dipped to as low as $0.71 on February 6th, down over 90% from its all-time high. By late February, HNT had rebounded to $1.45, a 100% bounce from the February 6th low. As of today it’s around $1.25. Still down massively from its all-time high, but the violence of the recovery from the bottom tells you what happens when selling pressure exhausts itself in a fundamentally strong project. Helium is not unique. Across the small-cap universe, projects that were trading for less than memecoins a month ago are beginning to find bids. 95% of altcoins were trading below their 200-day moving average, a signal that has historically appeared only at bear market bottoms. That number doesn’t typically stay above 90% for more than five months before a rebound begins. We are now five months in.

Our Small Coin Strategy (Fifth Khagan, LP) just completed its sixth consecutive year of outperforming its benchmark by at least 10 percent, through bull markets and bear markets alike. Last year it outperformed its market index by approximately 40%. The fund has returned +16.63% since inception versus its benchmark’s -93.69%. We are finding value in projects with real users, real revenue, and real technology, priced as if they’re worthless.

Decentralized AI: The Most Undervalued Sector in All of Technology

I said in February that blockchain-oriented decentralized AI companies represent the most undervalued component of the AI industry. I want to say it louder this time: the entire decentralized AI token sector is worth approximately $22–26 billion. Anthropic alone is worth 15 times the entire blockchain AI sector. OpenAI is worth 35 times the entire sector. NVIDIA’s single-quarter data center revenue ($35.6 billion) exceeds the combined market cap of every decentralized AI token in existence. Crypto AI prices are irrational. Decentralized AI networks are building real infrastructure:  Render provides decentralized GPU compute at a fraction of AWS pricing. Bittensor runs the first open, competitive marketplace for AI models (think Wikipedia for artificial intelligence) and just went through a Bitcoin-style halving in December 2025, cutting new supply in half. Virtuals Protocol has deployed 18,000+ AI agents and accumulated nearly $60 million in protocol fees.  These aren’t vaporware. These are working networks with growing usage, being priced at a 97% discount to their centralized counterparts.

The bull case is simple math: if blockchain AI infrastructure captures even 10% of the value Wall Street assigns to a single centralized AI lab like Anthropic, the sector roughly 1.5x’s from here. If it captures 20%, it 3x’s. And that’s using Anthropic, a company currently losing money, as the benchmark. The upside from a re-rating toward centralized AI valuations is enormous, and the catalyst (CLARITY Act + institutional on-ramps) is months away, not years.

Our Decentralized AI Strategy has outperformed its benchmark by more than 57 percentage points since inception. This team lives and breathes this space every day, and they are finding the deepest value of their careers right now.

What I’m Doing With My Own Capital

Same thing I told you in February. I’m adding. Every week. Primarily through our Small Coin and DeAI strategies. I have more than 50% of my personal net worth in our strategies. I’m not asking you to do anything I’m not doing myself.

If you have additional capital available, this is the time to deploy it. Not because I can promise you the bottom is in (I can’t, and I won’t) but because the risk/reward setup from these levels is as favorable as I’ve seen in eight years of running this firm. Prices are at generational lows. Fear is at historic extremes. Regulatory clarity is weeks to months away. The AI supercycle is accelerating. And the infrastructure Wall Street built to package and distribute crypto is sitting there, fully assembled, waiting for the green light.

We have five strategies: Large Coin (Blockchain Momentum, LP), Small Coin (Fifth Khagan, LP), Crypto & Income, Web3 Innovation Leaders, and Decentralized AI, LP. Every one of them is positioned for what comes next. But if I had to point you to two that are best-positioned to take advantage of the excessive selling in small-cap names and the growth of AI on blockchain, it’s Small Coin and Decentralized AI.

The process of adding to your existing position is easy. Just ask us for a deposit form with wiring instructions, and your investment will become effective at midnight on the day we receive your funds. That’s it. No complicated paperwork, no application. If you are not invested in Small Coin or DeCentrailied AI yet, we strongly recomend these agressive startegies at this point in the market cycle. Reply to me or [email protected] and we will send you the electronic application link. I believe one of the smartest things you can do in a market like this is average down. If you invested at higher prices, adding capital now lowers your overall cost basis, meaning you need less of a recovery to get back to even, and every point above that becomes pure upside. In a market that’s already shown signs of stabilizing, the math is powerful.

And here is something worth thinking about: crypto has doubled and tripled within a single year at three other prior points in our firm’s history, and each of those episodes started with exactly the same feeling and very similar macro setup as right now. Extreme fear, washed-out leverage, a catalyst on the horizon, and most people convinced it was over. It wasn’t over then, and I don’t believe it’s over now.

Tied to the Mast, Still and Increasing Exposure

I’ll close with the same metaphor. Odysseus lashed himself to the mast because he knew the sirens’ call would tempt him to abandon ship. The siren today sounds like: “Crypto is dead. It was all a scam. Sell everything.” That voice is loudest at bottoms. It always is. The market is coming back. Probably sooner than most people think. Stay tied, but take informed bold action if your personal situation allows for it. Please never hesitate to call or email if we can help with anything. We are, as always, at your service.

Past Market Commentary

Feb. 5: Crypto’s Winter of Discontent

Disclosures: This article is for informational purposes only and should not be considered financial, legal, tax, or investment advice. It provides general information on cryptocurrency without accounting for individual circumstances. Sarson Funds, Inc. does not offer legal, tax, or accounting advice. Readers should consult qualified professionals before making any financial decisions. Cryptocurrency investments are volatile and carry significant risk, including potential loss of principal. Past performance is not indicative of future results. The views expressed are those of the author and do not necessarily reflect those of Sarson Funds, Inc. By using this information, you agree that Sarson Funds, Inc. is not liable for any losses or damages resulting from its use.