As the market disturbances gradually recede by the end of 2025, crypto assets welcomed a positive recovery trend in the first week of 2026. Both BTC and ETH recorded significant gains, with market sentiment and on-chain structures showing signs of recovery from the year-end pressures. This article will analyze the current market stage by combining macro background, on-chain data, and derivatives market structure.
On the macro level, the core logic of market trading remains the shift in global liquidity expectations. The Federal Reserve continued its interest rate cut path in 2025, lowering the federal funds rate target range to 3.50% - 3.75% by year-end. The ongoing cooling of inflation and the job market provides the possibility for further monetary policy easing in 2026.
Although geopolitical events at the beginning of the year (such as the situation in Venezuela) briefly triggered a flight to safety, the market quickly digested this as a short-term emotional disturbance and did not constitute a driving factor for a trend reversal. Overall, a relatively mild macro policy outlook has created favorable external conditions for the recovery of the crypto market.
Market Performance: Tax Loss Selling Pressure Eases, Capital Replenishment Drives Price Recovery
In the first week of the year, BTC and ETH showed a clear recovery trend. BTC rebounded from around 88,000 USDT to above 92,000 USDT, with a return of about +5% since the beginning of the year; ETH saw a similar increase of about +6%. Behind this trend are three overlapping forces:
End of Holidays: Trading activity returned to normal, and market liquidity was restored.
Easing of Tax Loss Selling Pressure: The concentrated year-end sell-off pressure from U.S. investors realizing capital gains tax losses significantly weakened at the start of the new year after being released in December. Historical data shows that markets often rebound after such selling pressure ends.
Capital Replenishment: New allocation funds and active buying from the Asian time zone absorbed the year-end selling pressure, pushing prices upward from the post-correction trading range.
On-Chain Insights: Signs of Tightening Supply and Capital Inflows
Changes in on-chain data provide micro evidence for the market's stabilization and recovery: Exchange balances continue to decline: BTC and ETH are continuously net flowing out of centralized exchanges, leading to a tightening supply of chips available for immediate trading, reducing potential concentrated selling pressure; Stablecoin supply rebounds: The total market value of major stablecoins has returned to an upward trajectory, indicating that the "ammunition" available for purchasing crypto assets in the market is more abundant, providing liquidity support; On-chain activity warms up: The daily active addresses on the Bitcoin and Ethereum networks have rebounded at the beginning of the year, reflecting a gradual recovery in user participation and market popularity.
Derivatives Signals: Sentiment Shifts from Defensive to Tentative Offensive
Changes in the derivatives market structure clearly reveal the shift in market sentiment: Implied volatility (IV) is at a low level: Short-term options IV has dropped to near two-year lows, indicating that the market has low expectations for extreme volatility in the near term, with sentiment stabilizing; Skew structure significantly repairs: The 25Δ skew in the options market has rapidly converged, with BTC's skew turning from negative to positive. This means that the demand for protection against declines (put option premiums) has weakened, while the demand for chasing upward movements (call option premiums) has begun to heat up, shifting market sentiment from defensive to bullish; Open interest (OI) is concentrated: A large number of open positions in options are concentrated around key price levels near the current market price (such as the 90,000 and 100,000 USD areas for BTC), which will become important psychological and technical battlegrounds in the short term.
Product Strategies: Adapt to Market Stages, Optimize Risk and Return
Considering the current market characteristics of "repair and consolidation, direction yet to be clarified," investors can choose suitable structured product tools based on their views.
Expecting Range: If expecting the market to continue range-bound consolidation, consider strategies like FCN/dual currency, which can generate fixed coupons within specific price ranges by "selling volatility," suitable for phases where volatility is retreating from high levels.
Bullish on Dips: If long-term bullish but unwilling to chase highs, a discounted Accumulator allows for automatic buying in batches at preset lower levels, with knock-out conditions to control upward risk, suitable for gradual positioning.
Bullish or Hedging: If holding spot and hoping to take profits in batches at higher levels, or needing to hedge short-term risks, consider Decumulator/call options for covered selling, where the former can automatically sell in batches, and the latter can enhance spot returns and partially lock in selling prices.
Need for Liquidity: If needing financing but unwilling to bear margin call risks, non-margin financing can provide low-interest liquidity without margin call risks, suitable for long-term holders.
In summary, the current market is in a recovery phase following the year-end correction. Improved macro liquidity expectations, tightening micro on-chain supply, and warming sentiment in the derivatives market collectively form a bullish market structure. However, prices have rebounded to near key pressure zones, and whether the market can initiate a new trend still requires observation of effective breakthroughs at important resistance levels above.
The above content is from Daniel Yu, Head of Asset Management, and represents the author's personal views only.
Disclaimer: The market has risks, and investment should be cautious. This article does not constitute investment advice. Trading in digital assets may carry significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided in this content.
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