2026 Crypto Kickoff, a cautiously bullish new market starting point

Title: Crypto’s Constructive Start to 2026

Author: Tanay Ved

Source:

Reprint: Mars Finance

TL;DR

· At the beginning of 2026, the crypto market regained its upward momentum. Despite escalating geopolitical uncertainties, Bitcoin price surged to $94,000, and the total market capitalization of cryptocurrencies approached $3.3 trillion.

· Spot Bitcoin ETFs reversed the outflow trend at the end of last year with a net inflow of about $400 million on January 5; whale sell-offs have moderated, while retail investors are actively increasing their holdings.

· Derivatives market positions show a cautiously bullish stance. As of the end of January, open interest in Bitcoin call options is concentrated around the $100,000 strike price, while Ethereum call options are centered around the $3,500 strike price.

A Green Start to 2026

After weeks of range-bound trading during the holiday season, the crypto market kicked off the new year with strong momentum. Bitcoin soared to $94,000, and the total cryptocurrency market cap neared $3.3 trillion.

Despite the U.S. taking military action against Venezuela, escalating geopolitical tensions, the crypto market remained resilient. As gold, silver, and other precious metals prices surged towards the end of the year, digital assets also gradually recovered lost ground. Additionally, some altcoins strengthened, signaling an increased risk appetite in the market. However, due to evolving geopolitical situations, global markets may experience significant short-term volatility.

Over the past month, standout performers include memecoins like PEPE and BONK, privacy-focused Zcash (ZEC), and institutional lending platform Maple Finance (SYRUP). This phenomenon indicates a renewed market interest in memecoins, privacy tokens, and DeFi tokens with clear yield-sharing mechanisms and visible cash flow growth.

Conversely, Hyperliquid (HYPE) and Aster (ASTER) have underperformed. The reason is that, with the launch of the token airdrop for Lighter (LIT), a decentralized perpetual contract trading platform based on zero-knowledge Rollup technology, market attention has shifted within the decentralized perpetual trading platform sector. During this period, Aave (AAVE), a decentralized lending protocol, also declined, due to intense community debates over token holder rights, revenue distribution models, and the role of Aave Labs in decentralized autonomous organizations, along with multiple governance votes. This controversy reflects a broader trend in DeFi: leading protocols like Uniswap and Aave are re-evaluating how value is returned to token holders.

Institutional Funds Reflow, Whale Selling Subsides

The spot Bitcoin ETF reversed the end-of-year capital outflow trend, with a single-day net inflow exceeding $350 million on January 5, marking a return of institutional funds to the crypto market. In the days around New Year’s, spot Bitcoin ETFs experienced net outflows of over $320 million. This trend reversal indicates that, as the first quarter of 2026 begins, institutional investors’ allocation interest is warming.

Institutional crypto reserves are also expanding: the US Strategic Bitcoin Reserve added 1,287 BTC, bringing total holdings to 673,783 BTC; Bitmine increased Ethereum reserves to 4.14 million ETH, approximately 3.4% of the total ETH supply.

On-chain data shows that since January, whale wallets holding 1,000–10,000 BTC have significantly reduced their token sales, indicating weakening selling pressure from this group. Meanwhile, retail investors holding less than 1 BTC have been rapidly increasing their holdings since mid-November last year. As prices pull back from highs and consolidate, retail investors are buying the dip. The combination of reduced whale sales and continued retail accumulation creates a favorable market environment.

Derivatives Market Signals Cautious Optimism

Derivatives market positions indicate a cautiously optimistic outlook for Q1 2026. The following two charts show the open interest of Bitcoin and Ethereum options expiring on January 30, 2026, on the Deribit platform, categorized by strike price, providing an intuitive view of traders’ short-term market bets.

Options data shows that for contracts expiring on January 30, Bitcoin call options are heavily concentrated around the $100,000 strike price, while Ethereum call options are centered around $3,500. This suggests traders expect short-term upside potential but are not overly euphoric. Downside protection remains in place: Bitcoin put options have open interest around the $70,000–$90,000 range, with the overall open interest still tilted toward bullishness.

Futures markets send similar signals. At year-end, open interest in Bitcoin and Ethereum futures slightly declined but quickly rebounded in January, with the nominal open interest on major trading platforms approaching December’s highs. In late December, due to widespread deleveraging, funding rates for Bitcoin and Ethereum perpetual contracts briefly turned negative, but have since recovered to positive levels, with Ethereum’s funding rate outperforming Bitcoin’s. Overall, the market remains cautiously bullish, without signs of over-saturation.

Stablecoin Flows and On-Chain Activity

Stablecoin capital flows are a key indicator of crypto market liquidity. In early December last year, stablecoins experienced continuous net inflows, but near year-end, flows turned negative, with weekly outflows exceeding $1 billion. Since January 2026, stablecoin flows have stabilized and turned positive again. If this trend continues, it will support ongoing market growth.

On-chain activity data further confirms a positive outlook. Following Ethereum’s Fusaka upgrade in December, daily transaction volume on the Ethereum mainnet hit a record high of 2.23 million transactions, and active addresses approached historical peaks. Meanwhile, stablecoin on-chain transfer volume also set records in December, indicating that inflows into the crypto ecosystem are actively circulating rather than remaining idle.

Conclusion

Market data from the first week of 2026 paints a cautiously optimistic picture, with the crypto market gradually stabilizing. Institutional fund reflows, waning whale sell-offs, and positive signals from derivatives markets, combined with high on-chain activity and stablecoin net inflows, support a bullish outlook. However, geopolitical developments involving the US and Venezuela remain potential short-term risks that could trigger global market volatility.