Crypto prices today appear to be recovering, easing some of the pressure that weighed on the market through late December.
Summary
- Crypto markets opened the new year with improved sentiment as post-holiday trading resumed and risk appetite stabilized.
- Derivatives data shows lower leverage and reduced liquidations, suggesting traders are resetting positions rather than chasing short-term momentum.
- Analysts cite ETF flow stabilization and post-tax buying as key drivers
The total crypto market capitalization rose 1.2% to $3.08 trillion on Jan. 2. Bitcoin was trading at $88,678 at press time, up 1.3% over the past 24 hours, as price action remained range-bound but constructive.
The percentage moves for altcoins were higher. Leading the market amid renewed speculative interest were Cardano rising 6.3% to $0.3553, Sui gaining 4.5% to $1.46, and Pepe rising 21% to $0.0548.
The mood of the market also improved. Alternative’s Crypto Fear & Greed Index rose eight points to 28, moving from extreme fear into the fear zone. This implies that selling pressure has reduced since late December, but caution is still advised.
According to CoinGlass data, derivatives showed cooling leverage across the market. Open interest dropped 3.29% to $128 billion, indicating a decrease in speculative positioning, while 24-hour liquidations fell 46% to $126 million. The average relative strength index for the cryptocurrency market was 56, indicating neutral momentum.
January optimism returns, but volatility risks remain
The rebound comes as traders rotate back into risk assets following thin holiday liquidity. Historically, January has delivered stronger performance for crypto and equities alike, a pattern often referred to as the “January effect.”
First, post–tax-loss harvesting flows are returning to the market. Analysts note that aggressive selling into year-end, particularly from U.S. investors, often reverses in early January as portfolios are reset. Bitwise analysts described the late-2025 drawdown as “mechanical rather than fundamental,” arguing that forced selling created short-term mispricing.
Second, exchange-traded fund flows have also started to settle. Spot Bitcoin and Ethereum ETFs saw small outflows in mid-December, but those movements have since slowed, with late December and early January sessions showing much lighter redemptions.
Coinbase Institutional said many allocators chose to pause instead of fully exiting, preferring to wait for clearer macro signals before adding exposure again.
At the same time, sentiment has picked up as broader macro pressure eased. With no fresh geopolitical shocks and growing expectations for U.S. rate cuts later in 2026, risk appetite has begun to return, although cautiously.
Short-term outlook and analyst views
Analysts see Bitcoin consolidating between $85,000 and $93,000, with downside risk toward $84,000–$87,000 if liquidity thins again.
The leading cryptocurrency may move toward $100,000–$105,000 later in January if it can stay above $90,000, especially if ETF inflows rise and the macro environment stabilizes further. A break above that threshold might indicate that the market is gaining strong momentum again.
Analysts from Grayscale, Bitwise, Coinbase Institutional, and Galaxy Research are all optimistic about 2026. They see the late 2025 correction, in which Bitcoin ended the year about 6% lower, as a temporary reset rather than a reversal of the larger uptrend.
