2026 Crypto New Year's Rally: Cautiously Bullish Market Sets Sail
Original Title: Crypto's Constructive Start to 2026
Original Author: Tanay Ved, Coin Metrics State of the Network
Original Translation: Luffy, Foresight News
TL;DR
· At the beginning of 2026, the crypto market regained its upward momentum. Despite increased geopolitical uncertainty, the price of Bitcoin rose to $94,000, and the total crypto market cap approached $3.3 trillion.
· The spot Bitcoin ETF reversed the end-of-year outflow trend on January 5, with a net inflow of around $400 million; whale sell-off behavior showed some moderation, while retail investors actively increased their chip holdings.
· The derivatives market positions exhibited a cautious bullish stance. In the options contracts expiring by the end of January, open interest for Bitcoin call options was concentrated around the $100,000 price level, while Ethereum call options were concentrated around the $3,500 price level.
A Green Start to 2026
After experiencing weeks of range-bound trading during the holiday season, the crypto market saw a strong start to the new year. The price of Bitcoin surged to $94,000, and the cryptocurrency's total market capitalization approached $3.3 trillion.
Despite the U.S. taking military action against Venezuela, escalating geopolitical tensions, the cryptocurrency market remained resilient. As gold, silver, and other precious metal prices surged at the end of the year, crypto assets also began to reclaim lost ground. Furthermore, the strength of some altcoins signaled a warming market risk appetite. However, influenced by geopolitical developments, significant global market volatility remains possible in the short term.

Data Source: Coin Metrics and Reference Rates
Over the past month, standout coins have included Memecoins such as PEPE, BONK, privacy-focused Zcash (ZEC), and institutional credit platform Maple Finance (SYRUP). This trend indicates a resurgence in market interest in Memecoins, privacy-focused coins, and DeFi tokens with clear revenue-sharing mechanisms and visible cash flow growth.
In contrast, the performance of Hyperliquid (HYPE) and Aster (ASTER) has been less than satisfactory. The reason behind this is that with the launch of the decentralized perpetual contract trading platform Lighter (LIT) based on zero-knowledge Rollup technology and its token airdrop, market attention has shifted within the decentralized perpetual contract trading platform space. During this time, the decentralized lending protocol Aave (AAVE) also saw a decline due to intense debates within the community regarding token holder rights, revenue distribution models, and the role of Aave Labs in the decentralized autonomous organization, along with initiating multiple governance votes. This controversy reflects a widespread trend in the entire DeFi industry: top protocols represented by Uniswap and Aave are re-examining the implementation path for value return to token holders.
Institutional Fund Inflow, Whale Sell-off Cools Down
A spot Bitcoin ETF reversed the trend of fund outflows at the end of the year, with a net inflow of over $350 million on January 5, signaling institutional funds flowing back into the crypto market. In the days around New Year's Day, the spot Bitcoin ETF saw a net outflow of over $320 million. This trend reversal indicates that as the first quarter of 2026 begins, institutional investors' allocation interest is picking up.
The scale of institutional crypto asset reserves is also expanding: the U.S. Strategic Bitcoin Reserve added 1,287 Bitcoins, bringing the total holdings to 673,783 Bitcoins; Bitmine has increased its Ethereum reserves to 4.14 million ETH, accounting for approximately 3.4% of the total Ethereum supply.

Data Source: Coin Metrics
On-chain data shows that since the beginning of January, the token sell-off behavior of whale wallets holding 1,000-10,000 Bitcoins has noticeably tapered off, indicating a weakening selling pressure from this group. At the same time, retail investors holding less than 1 Bitcoin have been rapidly accumulating since mid-November last year. As cryptocurrency prices retreat from their highs and consolidate, retail investors are strategically positioning themselves at lower levels. The reduction in whale sell-offs combined with continued retail buying has collectively formed a favorable market scenario.

Data Source: Coin Metrics
Derivatives Market Signals Cautious Bullishness
Derivatives market positioning indicates a cautious bullish outlook for the first quarter of 2026. The following two charts display the open interest of Bitcoin and Ethereum options contracts on the Deribit platform expiring on January 30, 2026, aggregated by strike price, providing a visual representation of options traders' bets on the short-term market direction.

Data Source: Coin Metrics
The options market data shows that in contracts expiring on January 30, there is a significant concentration of open interest for Bitcoin call options around a $100,000 strike price, while Ethereum call options are concentrated around a $3,500 strike price. This indicates that traders are betting on short-term upside potential in the cryptocurrency market but without displaying excessive exuberance. The market's downside protection mechanism is also in effect: open interest for Bitcoin put options is around $70,000 to $90,000, showing an overall bullish skew in open interest structure.

Data Source: Coin Metrics
Similar signals are being transmitted by the futures market. Towards the end of last year, open interest in Bitcoin and Ethereum futures contracts saw a slight decline, followed by a rapid recovery in January. The nominal open interest on major exchanges is now close to the December peak from last year. In late December last year, due to widespread market deleveraging, Bitcoin and Ethereum perpetual contract funding rates briefly entered negative territory but have since recovered to positive levels, with Ethereum's funding rate significantly outperforming Bitcoin's. Overall, the market is currently in a state of cautious bullishness, without showing signs of being overbought.
Stablecoin Fund Flows and On-Chain Activity
The flow of funds in stablecoins is a key indicator for monitoring capital flows in the crypto market. In early December last year, the stablecoin market consistently saw net inflows, but towards the end of the year, the flow reversed from positive to negative, with a net outflow of over $1 billion in a single week. As we entered January 2026, stablecoin fund flows stabilized and turned back to net inflows. If this trend can continue, it will provide strong support for the ongoing rise in the crypto market.

Data Source: Coin Metrics
On-chain activity data further confirmed the market's positive trend. With the launch of the Ethereum Fusaka upgrade in December last year, the daily transaction volume on the Ethereum mainnet hit a historical high of 2.23 million transactions, and the number of active addresses also approached a peak. At the same time, stablecoin on-chain transfer volume in December last year also hit a record high. This phenomenon indicates that the funds flowing into the crypto market are not idle but actively circulating within the ecosystem.
Conclusion
The market data for the first week of 2026 outlines a cautiously optimistic picture, with the cryptocurrency market gradually gaining ground. Institutional funds reentering, whale sell-offs cooling down, optimistic signals from the derivatives market, coupled with sustained high on-chain activity and stablecoin funds returning to net inflows, multiple positive factors are supporting the market's upward trajectory. However, it is important to be cautious as the geopolitical situation between the United States and Venezuela could still pose a potential risk of triggering global market volatility in the short term.
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