Matrixport Market Observation: The Repair Window for the Crypto Market Opens, Structure and Sentiment Warm Up Simultaneously

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 phase in conjunction with the 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 rate-cutting 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, yielding approximately +5% since the beginning of the year; ETH saw an increase of about +6% in the same period. This trend is supported by three overlapping forces:

• Holiday End: Trading activity returned to normal, and market liquidity recovered.

• Easing of Tax Loss Selling Pressure: The concentrated selling 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, driving 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-level evidence for the market's stabilization and recovery: Exchange balances continue to decline: BTC and ETH are consistently flowing out of centralized exchanges, tightening the supply of chips available for immediate trading and reducing potential concentrated selling pressure; Stablecoin supply rebounds: The total market capitalization of major stablecoins has returned to an upward trajectory, indicating that the "ammunition" available for purchasing crypto assets is more abundant, providing liquidity support to the market; On-chain activity warms up: The number of daily active addresses on the Bitcoin and Ethereum networks has 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 a near two-year low, indicating that the market expects low 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 slightly bullish; Open interest (OI) is concentrated: A large number of options open positions are concentrated around key price levels near the current market price (such as the 90,000 and 100,000 USD regions for BTC), which will become important psychological and technical battlegrounds in the short term.

Product Strategies: Adapt to Market Phases, Optimize Risk and Return

Considering the current market characteristics of "repair and consolidation, direction to be determined," investors can choose suitable structured product tools based on their views.

• Expecting Range: If expecting the market to continue consolidating, consider strategies like FCN/dual currency, which can generate fixed coupons by "selling volatility" within specific price ranges, suitable for phases where volatility retreats 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 knockout conditions to control upward risk, suitable for phased layouts.

• Bullish or Hedging: For those holding spot and wishing to take profits in batches at higher levels, or needing to hedge short-term risks, consider decumulators/call options sold against spot, 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 financing is needed but unwilling to bear margin call risks, non-margin financing can provide low-interest liquidity without the risk of margin calls, suitable for long-term holders.

In summary, the current market is in a recovery phase following the year-end correction. Improvements in macro liquidity expectations, tightening on-chain supply, and warming sentiment in the derivatives market collectively form a bullish market structure. However, as prices have risen near key resistance areas, whether the market can initiate a new trend still requires observation of effective breakthroughs at significant 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 carries risks, and investment should be cautious. This article does not constitute investment advice. Trading in digital assets may 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 made based on the information provided herein.