Crypto has started 2026 on a relatively firm foundation. In the first four trading days of the year, the market cap weighted FTSE Grayscale Currencies Crypto Sector Index is up roughly 7%, with Bitcoin up 4%, Ethereum up 7%, and Solana up 9%. December showed us some stability, with Bitcoin holding in the $85K to $95K range, and annualized price volatility falling to 20% to 25% in the second half of the month vs typical volatility of 40-50%.
In our view, fund flows and other market indicators suggest crypto markets have stabilized after Novemberโs drawdown. Investors sold Bitcoin and Ether exchange-traded products (ETPs) in December, but much of this seemed related to โloss-harvestingโ used for tax purposes. Why? Roughly $1 billion left Bitcoin ETPs in December, while those same ETPs received a ~$500 million inflow on January 2nd aloneโthe first trading day of the new year. Moreover, open interest in perpetual futures edged higher--suggesting that the October 10 deleveraging is over--and we saw no evidence of additional Bitcoin selling by OG whales.
Key Takeaway: Crypto markets have started the New Year on a strong footing. We reiterate our expectation outlined in the 2026 Digital Asset Outlook that Bitcoin will make a new all-time high in the first half of 2026.
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