Matrixport Market Watch: Crypto Market Recovery Window Opens, Structure and Sentiment Warm Up Simultaneously

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As market disruptions gradually subside by the end of 2025, the first week of 2026 has seen a positive recovery in crypto assets. Both BTC and ETH have recorded significant gains, with market sentiment and on-chain structures showing signs of recovery from year-end pressures. This article will analyze the current market stage by considering macroeconomic 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 rate-cutting path in 2025, lowering the federal funds rate target range to 3.50% - 3.75% by year-end. Persistent cooling of inflation and the employment market provides the possibility for further monetary easing in 2026.

Although geopolitical events at the beginning of the year (such as the Venezuela situation) temporarily triggered risk-off sentiment, the market quickly digested these as short-term emotional disturbances, not driving a trend reversal. Overall, the relatively moderate macro policy outlook has created favorable external conditions for the recovery of the crypto market.

Market Performance: Tax Loss Selling Subsides, Capital Replenishment Drives Price Recovery

In the first week of the year, BTC and ETH showed a clear corrective upward trend. BTC rebounded from around 88,000 USDT to above 92,000 USDT, with a return of about +5% since the start of the year; ETH gained approximately +6% in the same period. Behind this movement are three overlapping forces:

Post-holiday normalization: Trading activity returns to normal, and market liquidity recovers.

Tax loss selling subsides: The year-end concentrated sell-off by US investors to realize capital gains losses was released in December, significantly weakening at the start of the new year. Historical data shows that such selling pressure often ends with a market rebound.

Capital replenishment: New allocation funds and Asian zone buying actively entered, absorbing year-end sell-offs and pushing prices upward from the oscillation range after correction.

On-chain Insights: Tightening Supply and Inflow Signs

Changes in on-chain data provide micro evidence for market stabilization and rebound: Exchange balances continue to decline: BTC and ETH are steadily flowing out of centralized exchanges, tightening the supply of tokens available for immediate trading, reducing potential concentrated sell pressure; Stablecoin supply rebounds: The total market cap of major stablecoins has resumed upward, indicating more “ammunition” available for purchasing crypto assets, supporting market liquidity; On-chain activity warms up: Daily active addresses on Bitcoin and Ethereum networks have increased at the start of the year, reflecting a gradual recovery in user participation and market popularity.

Derivatives Signals: Sentiment Shifts from Defensive to Tentative Offense

Changes in derivatives market structure clearly reveal a shift in market sentiment: Implied Volatility (IV) remains low: Short-term options IV has fallen to near two-year lows, indicating low expectations of extreme volatility in the near term, and a stabilizing sentiment; Skew structure significantly recovers: The 25Δ skew in options market converges rapidly, with BTC’s skew turning positive from negative. This suggests the demand for downside protection (put options premium) has weakened, while the demand for upside chasing (call options premium) has increased, shifting market sentiment from defensive to bullish; Open interest (OI) concentrated: Large open positions in options are centered around key price levels near the current price (e.g., BTC’s 90,000 and 100,000 USD zones), which will serve as important psychological and technical battlegrounds in the short term.

Product Strategies: Adapt to Market Stage, Optimize Risk-Reward

Considering the current market features of “recovery and consolidation, with direction yet to be clear,” investors can choose suitable structured products based on their views.

View consolidation: If expecting the market to continue range-bound, strategies like FCN/dual currency can be considered, which generate fixed yields by “selling volatility” within specific price ranges, suitable during phases of volatility decline from high levels.

Buy on dips: If long-term optimism exists but unwilling to chase highs, discounted Accumulators allow automatic phased buying at preset lower levels, with knock-out conditions to control upside risk, suitable for phased positioning.

Bullish or hedging: For those holding spot and wishing to take profits in parts at higher levels, or needing to hedge short-term risks, Decumulators or covered calls can be considered. The former automatically sells in tranches, while the latter enhances spot returns and partially locks in selling prices.

Liquidity needs: For those requiring financing without wanting to bear margin call risks, no-margin financing can provide low-interest liquidity without margin calls, suitable for long-term holders.

Overall, the current market is in a recovery phase after year-end correction. Improved macro liquidity expectations, tightening on-chain supply, and warming derivatives market sentiment collectively form a bullish market structure. However, prices have risen near key resistance zones, and whether a new trend can be initiated depends on the effective breakthrough of important resistance levels above.

The above content is from Daniel Yu, Head of Asset Management. The article reflects only the author’s personal views.

Disclaimer: The market carries risks; investment should be cautious. This article does not constitute investment advice. Trading digital assets can involve 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 based on the information provided herein.