The issue occurs when using Optifine (tested versions G6, G7)
with the latest build of OptiFabric, and any shaders are selected (even internal) on 1.16.5.
Any time a block with e semi-transparent texture is held, all semi-opaque blocks in the level will enter screen space (the camera rotaion is ignored for these blocks, )

Here is another open issue that is reporting the same thing but with far less details.
#192

Here is a highlight from the stream when I discovered the issue.
https://www.twitch.tv/videos/994714658