Performance Update

As of February 2026, Bursera Capital's total ROI is 587.53%* since the fund's inception in 2019, with Bitcoin standing at 551.22% and the average fund reaching 384.72%. Returns are -8.38%*, with the average fund reporting -13.76% and Bitcoin at -14.13%. Our Compound Annual Growth Rate (CAGR) is 34.02% with Bitcoin at 32.92% and the average fund at 27.09%.

EXECUTIVE SUMMARY

Crypto markets experienced a significant drawdown in early February, with the FTSE/Grayscale Crypto Sectors Index declining 26% from January 30 through February 5. Bitcoin fell from the mid-$90Ks to the mid-$60Ks. However, markets have since stabilized, volume and volatility have normalized, and the fundamental backdrop has only strengthened. Institutional adoption is accelerating at an unprecedented pace, with Morgan Stanley filing for a dedicated digital asset trust charter and 97% of institutional investors surveyed identifying tokenized ETFs as important for mainstream adoption. This drawdown represents an opportunity to accumulate, not a regime change.

I. February Market Overview: The Drawdown in Context

Crypto markets tumbled in early February alongside high-growth software stocks and other equity segments tied to early-stage technology. The selloff was driven by a broad derisking of growth-oriented portfolios as AI innovation accelerated, not by any crypto-specific fundamental breakdown. According to Grayscale Research, the FTSE/Grayscale Crypto Sectors Index declined 26% from January 30 through February 5, before recovering approximately 4% through month-end.

Bitcoin fell from approximately $97K in mid-January to the mid-$60K range by early February. Trading volume spiked sharply during the drawdown—a textbook capitulation pattern—before settling back to normal levels. Option-implied volatility and perpetual futures open interest followed a similar arc: stress during the flush, then normalization.

Sector Performance

Looking at sector-level returns for February, the AI crypto sector was the clear relative strength leader, declining only 4% versus 16–29% across all other sectors. Consumer & Culture was the worst-hit at -29%, followed by Smart Contract Platforms, Currencies, and Ether at -21% each. Bitcoin fell 16%, while Financials and Utilities & Services each declined 18%.

February 2026 Crypto Sector Returns

Our view: This was a beta-driven flush, not a fundamental deterioration. The sectors with real adoption momentum—AI agents, stablecoins, tokenization, perpetual futures infrastructure—are all showing relative strength or accelerating development. For a fund running mean reversion strategies, this is exactly the kind of dislocation that creates opportunity.

II. Institutional Adoption: The Bigger Picture

While price action captured headlines, the more important story in February was the continued and accelerating institutional buildout across the digital assets ecosystem. Three developments stand out.

Morgan Stanley Files for Digital Asset Trust Charter

On February 18, 2026, Morgan Stanley—the world’s largest wealth management firm with $9.3 trillion in client assets—filed with the U.S. Office of the Comptroller of the Currency (“OCC”) for a new national trust bank charter under the name Morgan Stanley Digital Trust, National Association (MSDTNA). The charter would allow the subsidiary to custody digital assets, execute trades, and facilitate fiduciary staking on behalf of clients.

Critically, Morgan Stanley is building—not buying—this infrastructure. Amy Oldenburg, the firm’s head of digital assets strategy, publicly stated at the Bitcoin For Corporations conference that they need to build custody and trading capabilities internally, citing brand trust and a “no fail” standard. This represents a major capital commitment and signals that digital assets are being treated as a core business line, not a peripheral experiment.

This charter application follows a series of moves: an S-1 filing in January 2026 for a Bitcoin Trust ETF (with ETH and SOL products), and the October 2025 removal of client restrictions that previously limited crypto ETP access to clients with $1.5M+ and aggressive risk profiles. All clients, including retirement accounts, can now access cryptocurrency funds.

Expanding Regulatory Infrastructure

Morgan Stanley joins a growing pipeline of OCC crypto trust charters. Eight have already been conditionally approved—including Circle, Ripple, BitGo, Fidelity, Paxos, Stripe’s Bridge, Crypto.com, and Protego—with Coinbase and World Liberty Financial also on deck. The OCC has further clarified its regulatory posture with Bulletin 2026-4, a final rule effective April 1, 2026, confirming that national trust banks may engage in non-fiduciary activities, such as digital asset custody.

On the legislative front, the Clarity Act remains in play in the U.S. Senate. While the Senate Banking Committee delayed its scheduled markup in January, three White House meetings with crypto and banking industry participants have followed, with the most recent reportedly involving focused discussion on stablecoin yield frameworks. Grayscale notes that even without the Clarity Act, regulatory clarity has advanced on multiple fronts.

Tokenization Goes Mainstream

A global study by Nickel Digital Asset Management—surveying institutional investors (pension funds, insurance asset managers, and family offices) and wealth managers collectively overseeing more than $14 trillion in assets—found that 97% believe the potential launch of tokenized ETFs will be important to the expansion of the sector. Nearly 70% expect the number of fund managers tokenizing investment funds to increase over the next three years.

Private markets are seen as offering the greatest tokenization potential: nearly 70% identified private equity as the top opportunity, followed by fixed income (55%) and public equities (42%). This institutional consensus aligns with on-the-ground developments: BlackRock has moved to integrate its tokenized money market fund BUIDL with UniswapX, Meta is reportedly re-entering stablecoins, and Stripe has described stablecoin adoption as advancing “quietly and inexorably.”

KEY SIGNAL

The world’s largest wealth manager ($9.3T in client assets) is building proprietary digital asset infrastructure. Eight OCC crypto trust charters are approved. 97% of surveyed institutional investors see tokenized ETFs as important. These are structural demand signals—custody, staking, and trading volume all flow from this institutional buildout.

III. Innovation & Ecosystem Developments

Beyond price action and institutional flows, February saw meaningful progress across several verticals, reinforcing the fundamental case for digital assets.

AI Agents & Crypto

The AI crypto sector’s outperformance (-4% vs. - 16% to -29% across other sectors) reflects growing conviction that blockchains and AI are complementary rather than competitive. Blockchains are emerging as the natural financial rails for AI agents, given advantages over traditional bank-based systems. Projects like Kite AI (agent-native stablecoin payments) and Pippin AI (on-chain agent infrastructure) led the sector. Near Protocol unveiled initiatives at the intersection of AI and privacy, including confidential transactions and AI agents with built-in encryption guarantees.

Perpetual Futures Infrastructure

Hyperliquid continued its expansion beyond crypto-native assets. Notably, its silver futures reached approximately 2% of CME COMEX silver futures volume—a meaningful threshold suggesting these markets are becoming large enough to watch alongside legacy venues. Hyperliquid futures already exist for international equities, positioning the platform as an always-on venue for global macro views outside traditional trading hours. For our fund, expanding on-chain liquidity is directly accretive to execution quality and strategy capacity.

Prediction Markets

Polymarket and Kalshi saw another volume surge around Super Bowl LX, but more notable was the sustained trading activity in the weeks that followed. These platforms have become a part of the broader information landscape. Polymarket filed a trademark application for a POLY token, and the Federal Reserve published an analysis validating the use of prediction markets for forecasting economic variables such as CPI inflation.

Compliance & Security

On the security front, SynapTrack—a blockchain forensics system developed by researchers at the University of Birmingham—was unveiled at the CyberASAP Demo Day in London. The system traced funds from the $1.5B Bybit hack with 98% accuracy, a significant improvement over existing methods that yield a 40% false-positive rate. Cross-chain transaction tracing, the biggest gap in current AML systems, is a core capability. This kind of infrastructure makes the entire ecosystem safer and more investable for institutional capital.

IV. Outlook & Positioning

The February drawdown was driven by a broad reallocation away from growth assets as AI innovation reshuffled market expectations. Importantly, this was not a crypto-specific event—blockchains do not compete with large language models, and the market is beginning to differentiate between technologies that are disrupted by AI and those that are complementary to it.

Three macro factors support a constructive view going forward:

1. Institutional infrastructure is scaling rapidly. Morgan Stanley’s charter application, eight approved OCC charters, and near-universal institutional conviction on tokenization represent a structural shift in how traditional finance engages with digital assets.
2. The macro environment remains supportive. The U.S. economy appears healthy, AI investment is still ramping, data center capacity remains constrained, and the Fed Chair transition is unlikely to produce the hawkish pivot some fear.
3. Fundamental innovation continues unabated. AI-crypto convergence, the expansion of perpetual futures into traditional assets, the maturation of prediction markets, and improved compliance tooling all reinforce the long-term value proposition.

BOTTOM LINE

The February drawdown created a meaningful discount across crypto assets, while the fundamental narrative—institutional adoption, regulatory clarity, and technological innovation—has only strengthened. Bursera Capital views this as a favorable environment for patient capital accumulation and believes valuations will follow fundamentals as the cycle progresses.

*Fund I (unaudited) was open from July 2019-2021 before the Fund was transitioned to the Cayman Islands. Cumulative return net of fees, between Bursera Fund I and the continuation Fund II.

*Data from February 2026 subject to crystallization.