Bitcoin and the broader crypto market have opened 2026 on firm footing, rebounding sharply from a weak December as capital flows, geopolitics and positioning dynamics realign. After spending much of late 2025 under pressure from tax-related selling and thin liquidity, digital assets are benefiting from a mix of fresh allocations, renewed institutional demand and a tentative safe-haven bid.
At the start of the new year, Bitcoin traded near $93,700, up more than 7% since Jan. 1, while Ethereum rose nearly 9% over the same period to around $3,220. Large-cap tokens outperformed, led by XRP, which surged nearly 30% on the week, alongside strong gains in Solana and Dogecoin.
Year-end pressure fades, opening room for a rebound
A key driver behind the rally has been the removal of year-end headwinds. December price action was capped by tax-loss selling and portfolio cleanups, particularly among U.S.-based investors looking to offset capital gains. That forced liquidation weighed on prices and suppressed risk-taking during North American trading hours.
As the calendar turned, that pressure eased. Market participants point to a classic January reset, where sidelined capital begins to redeploy into assets that underperformed late in the prior year. Singapore-based trading firm QCP Capital described the shift as a move toward a new regime, noting that crypto’s correlation with broader risk assets is reasserting itself as tax effects fade and policy optionality returns to focus.
Geopolitics and the return of the haven narrative
Geopolitical developments have also played a role. The recent U.S. military strike in Venezuela injected fresh uncertainty into global markets, prompting flows into perceived hard assets. Bitcoin, often framed as “digital gold,” appears to have benefited alongside traditional havens.
Traders say the move reflects a combination of fresh risk budgets, rotation out of outperforming assets and selective hedging against geopolitical risk. Some analysts also note that speculation around Venezuelan oil supply and its potential disinflationary impact has revived expectations of faster rate cuts, a backdrop that tends to support risk assets, including crypto.
ETF inflows signal institutional re-engagement
Perhaps the most concrete support has come from exchange-traded funds. After suffering record outflows in November and December, U.S.-listed spot crypto ETFs have started 2026 with renewed inflows. Data from SoSoValue shows more than $1 billion entering bitcoin, ether and XRP ETFs in the first two trading days of the year.
That reversal suggests institutional investors are stepping back in after a two-month de-risking phase. According to BRN Research, the combination of year-end consolidation below key resistance and improving ETF flows helped stabilize prices during thin holiday liquidity, laying the groundwork for the current advance.
Options markets echo that cautiously bullish stance. On Deribit, traders have increased demand for bitcoin call options at the $100,000 strike, while ether calls clustered around $3,200–$3,400. While volumes remain moderate, the directional bias points to expectations of further upside if momentum holds.
Thin liquidity remains a key risk
Despite the constructive setup, not all signals are unambiguously bullish. Spot market liquidity remains shallow, with trading volumes near multi-year lows. In such an environment, even modest flows can drive outsized price moves, increasing the risk of sharp extensions or sudden pullbacks.
As Vikram Subburaj, CEO of Giottus exchange, noted, the short-term structure has flipped from weakness to strength, but conviction is not yet broad-based. The durability of the rally will depend on whether ETF inflows persist and whether spot volumes recover as trading desks fully return.
For now, crypto’s strong start to 2026 reflects a reset in positioning rather than outright exuberance. If institutional demand continues and macro conditions remain supportive, the rebound could evolve into something more durable. If not, thin liquidity may yet reintroduce volatility.
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