CRYPTO MARKET: BITCOIN, ADA, SUI, PEPE JUMP AS JANUARY EFFECT EMERGES

Cryptocurrency markets are starting the year on a positive note, easing some of the pressure that weighed on prices in late December. As of January 2, the total crypto market capitalization rose 1.2% to reach $3.08 trillion. Bitcoin was trading at $88,678, up 1.3% over the past 24 hours, showing steady and constructive range-bound movement.

Altcoins saw even stronger gains, reflecting renewed investor interest. Cardano climbed 6.3% to $0.3553, Sui increased 4.5% to $1.46, and Pepe surged 21% to $0.0548. Market sentiment also improved, with the Crypto Fear & Greed Index rising eight points to 28. While the market has moved out of extreme fear, caution remains important for investors.

Derivatives data from CoinGlass showed cooling leverage across the market. Open interest dropped 3.29% to $128 billion, signaling reduced speculative activity, while 24-hour liquidations fell 46% to $126 million. The average relative strength index (RSI) for the crypto market stood at 56, indicating neutral momentum and a market in the early stages of recovery.

January Optimism Returns, but Volatility Risks Remain

Cryptocurrency markets are showing early signs of recovery as traders rotate back into risk assets following the thin liquidity of the holiday season. Historically, January has delivered strong performance for both crypto and equities, a phenomenon often called the “January Effect.”

Post-Tax-Loss Flows Boost Market Activity

One factor behind the rebound is the return of post–tax-loss harvesting flows. Analysts note that aggressive selling at year-end, particularly by U.S. investors, often reverses in early January as portfolios are reset. Bitwise analysts described the late-2025 sell-off as “mechanical rather than fundamental,” suggesting that forced selling temporarily created short-term mispricing in the market.

ETF Flows Begin to Stabilize

Exchange-traded fund movements are also contributing to improved market conditions. Spot Bitcoin and Ethereum ETFs saw modest outflows in mid-December, but these redemptions have slowed in late December and early January. Coinbase Institutional noted that many allocators paused rather than fully exited, waiting for clearer macroeconomic signals before increasing exposure.

Macro Sentiment Supports Gradual Risk Appetite

Market sentiment has benefited from easing macro pressures. With no new geopolitical shocks and growing expectations for U.S. interest rate cuts later in 2026, investors are beginning to re-enter risk assets. While optimism is returning, the approach remains cautious, reflecting lingering volatility risks as the market seeks direction.

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Short-Term Outlook for Bitcoin

Analysts anticipate Bitcoin consolidating in a range between $85,000 and $93,000. If liquidity thins or selling pressure returns, the downside could extend toward $84,000–$87,000, highlighting potential near-term risks.

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Potential Upside if Key Levels Hold

Bitcoin may target $100,000–$105,000 later in January if it maintains support above $90,000. Stronger ETF inflows and a stabilizing macro environment could push the market into renewed momentum, signaling that bullish sentiment is returning.

Analyst Perspectives on 2026

Experts from Grayscale, Bitwise, Coinbase Institutional, and Galaxy Research remain optimistic about Bitcoin’s trajectory in 2026. They view the late-2025 6% year-end decline as a temporary market reset rather than a reversal of the broader uptrend, suggesting the long-term bullish structure remains intact.