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Forged in fire

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by Coinbits
Friday, Feb 13, 2026 - 14:07

Bear markets forge bitcoiners.

Bitcoin is down over 40% from its all-time high, and the fair-weather tourists are heading for the exits. Good. Excess leverage flushed, weak hands shaken out, and coins migrating to those with conviction and time horizons measured in decades. As Leon Wankum wrote this week, "bear markets are not a failure of bitcoin, but a prerequisite for its survival."

Meanwhile, beneath the noise, bitcoin infrastructure keeps compounding. S&P is rating bitcoin-backed bonds, Lightning Labs just handed AI agents the ability to transact in bitcoin without identity or permission, and Europe's largest banks are opening bitcoin access to millions of retail customers. Researchers are even publishing quantum defense frameworks decades before any threat materializes.

Bitcoin is priced like a risk asset, but readers of this newsletter know that it is not. Take advantage of that.

The fiat system papers over pain with printed money and deferred consequences. Bitcoin metabolizes it, purging speculation, resetting expectations, and emerging harder than before.

As Marty Bent observed after watching an AI agent autonomously spin up a Lightning node and begin transacting: "The way in which we interact with bitcoin is rapidly evolving before our eyes."

The cycle continues. The builders don't stop.

Bitcoin community advances quantum preparedness as CoinShares and BitMEX Research publish institutional risk frameworks

CoinShares published an analysis concluding that bitcoin's quantum vulnerability is manageable, noting that cracking bitcoin's elliptic curve cryptography would require 13 million physical qubits, roughly 100,000 times today's largest quantum computer, and that only 10,200 coins sit in positions that could cause meaningful market disruption if compromised.

Separately, BitMEX Research outlined multiple recovery schemes that could allow quasi-frozen coins to be reclaimed in a quantum-safe way, including zero-knowledge proof methods that would let users continue spending bitcoin after a quantum event without any advance preparation.

Bitcoin's immune system is already hard at work

The simultaneous publication of institutional-grade risk analysis and concrete technical recovery proposals shows bitcoin's decentralized development ecosystem functioning exactly as designed by identifying long-horizon threats and engineering solutions well before they become urgent, all without a central authority directing the effort.

U.S. digital asset market structure bill faces uncertain path as stablecoin yields and ethics concerns stall progress

Industry insiders peg the odds of comprehensive digital asset legislation passing in 2026 between 25% and 60%, with two sticking points dominating negotiations: how to treat stablecoin yields, which banking groups argue could siphon deposits from community banks, and ethics concerns around President Trump's roughly $1.4 billion in bitcoin and altcoin-related ventures. A Senate Banking Committee markup isn't expected until March, and no Democrats voted yes on a related bill in the Senate Agriculture Committee last month.

Bitcoin doesn't need Washington's, or anyone’s, permission

Bitcoin operated for fifteen years without a regulatory framework and will continue to function regardless of whether Congress acts this session or next.

As BPI Head of Policy Zack Shapiro cautioned, "progress on market structure will be a failure if it comes at the expense of core protections for developers and the right to self-custody."

S&P rates Wall Street's first public bitcoin-backed bond as volatility stress-tests the structure

S&P Global Ratings assigned a rating to Ledn Issuer Trust 2026-1, a $188 million asset-backed bond deal arranged by Jefferies and collateralized by thousands of bitcoin-backed loans. A 27% bitcoin drawdown since mid-January forced Ledn to liquidate roughly one-quarter of the loan pool, shifting the collateral mix from $199 million in loans to approximately $150 million in loans and $50 million in cash — yet the deal remains on track to close February 18th.

Bitcoin earns a seat at the ratings table

The S&P is rating bitcoin-collateralized debt by applying stress models, recovery assumptions, and tranche structures just as it would for any traditional asset-backed security. The structure faced a real-world stress test within weeks and survived, demonstrating that bitcoin-native lending infrastructure can absorb volatility without principal losses.

BlockFills halts withdrawals as bitcoin and altcoin drawdowns exposes overleveraged platforms

Institutional trading platform BlockFills, which handled $60 billion in volume last year, suspended client deposits and withdrawals, citing "recent market and financial conditions." The Chicago-based firm, backed by Susquehanna, drew immediate comparisons to the 2022 wave of platform collapses that began with similar freezes.

Not your keys, not your coins

Platforms built on thin margins get exposed when volatility returns, not because bitcoin failed, but because the intermediaries did. Bitcoin is an extremely-desirable bearer asset. When you let others hold it for you with a promise to give it back when you ask, you are really just asking for trouble.

Lightning Labs releases AI agent tools for native bitcoin Lightning payments

Lightning Labs open-sourced a toolkit that gives AI agents native access to the bitcoin Lightning Network, enabling autonomous systems to run nodes, make payments, and host paid endpoints without identity, API keys, or signup flows. The release includes lnget, a command-line client that automatically pays Lightning invoices when an agent encounters an HTTP 402 response, creating seamless machine-to-machine commerce.

Bitcoin becomes the payment rail for the AI economy

While Coinbase and Stripe build agent payment tools on top of stablecoins and traditional rails, Lightning Labs is betting that bitcoin's Lightning Network, instant, permissionless, and requiring no identity, is the natural fit for autonomous machine payments at scale.

BITCOIN ADOPTION CONTINUES

ING Deutschland opened retail access to bitcoin ETPs for its 3.2 million brokerage customers in Germany, with fee-free trading on orders above €1,000.

BlackRock's APAC head Nicholas Peach said even a 1% bitcoin allocation across Asian portfolios could unlock $2 trillion in new inflows.

U.S. spot bitcoin ETFs added $167 million in inflows over three consecutive days, nearly erasing $318 million in outflows from the prior week despite a 13% price decline.

DDC Enterprise added 100 bitcoins for the fifth consecutive week, bringing total corporate holdings to 1,988 coins as it targets 5,000 within 36 months.

Denmark's largest bank, Danske Bank, reversed eight years of resistance by granting access to its five million retail customers to bitcoin ETPs under the EU's MiCA framework.

Strategy purchased 1,142 bitcoins for $90 million, bringing total corporate holdings to 714,644 acquired at an average cost of $76,056 per coin.

HOW BITCOIN WORKS

Learn one key idea about bitcoin each week. This week:

Who actually controls the money?

The Senate is expected to confirm Kevin Warsh as the next Federal Reserve Chair. The man who will inherit the single most powerful unelected position in global finance. But what does that power actually look like, and who really calls the shots?

The Federal Open Market Committee sets interest rate targets through a vote of 12 members. The Chair controls the agenda but gets only one vote. The other members, a mix of governors appointed by the president and regional bank presidents, serve staggered terms designed to insulate them from political pressure. In theory, this creates independence. In practice, it creates politics.

As Bloomberg's John Authers argued, the Fed is evolving to resemble the Supreme Court: occasional intense political battles over appointments, followed by coalition-building among members whose preferences may shift unpredictably.

The Bank of England already operates this way, with regular split votes and three-way disagreements on rate decisions. The Fed appears headed in the same direction, with rising dissent under Powell and a committee increasingly aware of its own power.

This means the monetary policy governing the world's most prominent reserve currency ultimately comes down to the internal dynamics of a small group of appointed officials, with their relationships, their egos, their career incentives, and the political environment that put them there.

Bitcoin takes a fundamentally different approach. Its monetary policy was fixed when the first block was mined in 2009, and it cannot be changed. No committee votes on supply. No chair sets the agenda. No president appoints the decision-makers. The rules are enforced by code and validated by thousands of independent nodes worldwide.

The Fed asks you to trust that the right people will make the right decisions under political pressure. Bitcoin completely removes the need to rely on fallible humans in order to have a functional form of money.

COIN CHECK

In 2010, Laszlo Hanyecz paid 10,000 bitcoins for two pizzas in what is considered bitcoin's first real-world transaction. What Layer 2 protocol now enables instant bitcoin payments at merchants like Steak 'n Shake?

A. The Liquid Network
B. The Lightning Network
C. Solana
D. The Base Network

Check your answer at the end of the page.

FROM THE MEME POOL

Follow us on X for more fresh content

ANSWER

Answer: B. The Lightning Network is a second-layer protocol built on top of bitcoin, designed to enable small, instant, low-cost transactions for everyday purchases by moving activity off the base chain and settling back to it only when needed. Beyond consumer payments, it also holds significant promise as a high-speed settlement layer for AI agents, enabling autonomous systems to exchange value in real time.

Contributor posts published on Zero Hedge do not necessarily represent the views and opinions of Zero Hedge, and are not selected, edited or screened by Zero Hedge editors.
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