As market turbulence from the end of 2025 gradually recedes, crypto assets experienced a positive recovery in the first week of 2026. Both BTC and ETH recorded notable price increases, and market sentiment as well as on-chain structures showed signs of recovery from end-of-year pressures. This article will analyze the current stage of the market by combining macroeconomic context, on-chain data, and derivatives market structure.
At a macro level, the core logic of market trading remains the shift in global liquidity expectations. The Federal Reserve continued its interest rate-cutting path in 2025, lowering the target range for the federal funds rate to 3.50%-3.75% by year-end. The ongoing cooling of inflation and the labor market may provide room for further monetary easing in 2026.
Although geopolitical events at the beginning of the year, such as the situation in Venezuela, briefly triggered a flight-to-safety sentiment, the market quickly digested these as short-term emotional disturbances and they did not become driving factors for a trend reversal. Overall, the relatively mild macroeconomic policy outlook has created favorable external conditions for the recovery of the cryptocurrency market.
Market Performance: Tax-loss selling pressure eases, fund inflows drive price recovery
In the first week of the year, BTC and ETH showed a clear corrective upward movement. BTC rebounded from around 88,000 USDT to above 92,000 USDT, delivering a year-to-date return of approximately +5%; ETH rose by about +6% during the same period. This price movement was driven by the combined effect of three factors:
Holiday End: Trading Activities Return to Normal, Market Liquidity Restored.
Tax-loss selling pressure eases: The year-end concentrated selling by U.S. investors to realize capital gains tax losses was released in December, and significantly weakened at the beginning of the new year. Historical data shows that the market often experiences a rebound after such selling pressure subsides.
Fund replenishment: New capital inflows and active buying from Asian time zones absorbed the year-end selling pressure, pushing the price upward from a consolidation range following the pullback.
On-chain Insights: Signs of Supply Tightening and Inflows
Changes in on-chain data provide micro-level evidence for the market's stabilization and recovery: - **Exchange balances continue to decline**: BTC and ETH have experienced continuous net outflows from centralized exchanges. The reduced supply of coins available for immediate trading in circulation has led to tighter liquidity, diminishing the potential for concentrated selling pressure. - **Stablecoin supply rebounds**: The total market value of major stablecoins has returned to an upward trend, indicating that more "ammunition" is available within the market for purchasing crypto assets, thus providing liquidity support. - **On-chain activity warms up**: The number of daily active addresses on the Bitcoin and Ethereum networks has increased at the beginning of the year, reflecting a gradual recovery in user participation and market sentiment.
Derivative Signal: Sentiment Shifts from Defensive to Tentative Offensives
Changes in the derivatives market structure clearly reveal a shift in market sentiment: - **Implied Volatility (IV) at a low level**: Short-term option IV has dropped to a two-year low, indicating that the market expects low extreme volatility in the near term and is becoming more stable. - **Significant improvement in Skew structure**: The 25Δ skew in the options market has rapidly converged. For BTC, the skew has turned from negative to positive. This means the demand for downside protection (put premium) has weakened, while the demand for upside exposure (call premium) is increasing. Market sentiment is shifting from defensive to more bullish. - **Concentrated Open Interest (OI)**: A large amount of open interest in options is concentrated around key price levels near the current spot price (e.g., the $90,000 and $100,000 levels for BTC). These levels will become important psychological and technical battlegrounds in the short term.
Product Strategy: Align with Market Stages, Optimize Risk and Return
Given the current market characteristics of "recovery consolidation with an unclear direction," investors can choose suitable structured products based on their own market outlook.
Observing consolidation: If the market is expected to continue consolidating within a range, strategies such as FCN or dual-coin options can be considered. These strategies allow earning a fixed coupon by "selling volatility" within a specific price range, and are suitable for periods when volatility has declined from a high level.
Buy low and accumulate: If you have a long-term bullish view but are unwilling to chase high prices, a discounted Accumulator allows you to automatically purchase in batches at preset lower price levels, while setting a knock-out condition to manage upward risks. This is suitable for a gradual accumulation strategy.
Bullish or hedging: If you hold the underlying asset and wish to take profits in installments from the upside, or need to hedge short-term risks, you may consider using a Decumulator or a covered call strategy. The former allows for automatic installment selling, while the latter enhances the returns from the underlying asset and partially locks in the selling price.
Liquidity with No Margin Call Risk: If you need financing but do not want to bear the risk of margin calls, our no-margin-call financing offers low-interest liquidity without the risk of margin calls, making it ideal for long-term holders.
Overall, the current market is in a recovery phase following the year-end correction. Improved macro liquidity expectations, tighter supply on the on-chain level, and warming sentiment in the derivatives market collectively form a bullish market structure. However, prices have now risen to a key resistance area. Whether the market can launch a new trend will depend on whether it can effectively break through these important resistance levels.
The above content is from Daniel Yu, Head of Asset Management. The views expressed in this article represent the author's personal opinions.
Disclaimer: The market carries risks, and investment should be approached with caution. This article does not constitute investment advice. Digital asset trading may involve significant risks and volatility. Investment decisions should be made after carefully considering individual circumstances and consulting with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided in this content.