📢 January Signals 📢

🗒️ Market update

January 2026: A Market on the Mend

As we wrap up the first few weeks of 2026, the overarching theme is cautious recovery. After a volatile close to 2025, marked by sharp drawdowns, lingering macro pressures, and some four-year-cycle selling, the digital asset space is showing signs of stabilization and renewed momentum. Bitcoin (BTC) is up roughly ~7% year-to-date, trading around ~$93,300, while total crypto market cap sits near ~$3.24 trillion.

This rebound isn’t without hurdles, geopolitical flare-ups, policy uncertainty, and periodic volatility remain part of the landscape, but institutional flows and structural shifts suggest we’re entering a consolidation phase with upside optionality. Below we break down the key themes.

Year-to-Date: From Dip to Rally

The start of 2026 has been a breath of fresh air compared to the choppy end of 2025, when Bitcoin briefly dipped below $80,000 amid futures liquidations and tariff headlines. Fast-forward to mid-January and BTC has rebounded to ~$93,300, briefly tagging ~$97,000. That move has lifted the broader complex as well, with Ethereum (ETH) also higher and selective altcoins (SOL, XRP) posting sharp weekly rebounds.

Key drivers so far:

• Improving liquidity and sentiment: “Fear” indicators have eased from extreme levels, consistent with early-cycle accumulation behavior and the first hints of rotation returning to higher beta.

• Macro tailwinds (with caveats): Expectations for solid U.S. growth and a “slow-but-steady” path to rate cuts have supported risk assets, even as inflation remains sticky.

• Cycle dynamics: We may be entering less familiar territory following 2025’s muted follow-through. Near-term catalysts include supply milestones (e.g., the 20 millionth BTC mined in March) and the usual reflexivity that arrives when price recovers key levels.

Here’s a snapshot of top performers YTD (as of Jan 20):

*coinmarketcap

The bigger takeaway: price action has shifted from big moves on ‘thin liquidity’ toward more deliberate accumulation, typically a healthier backdrop for sustained trends.

Geopolitical Winds: Risks and Opportunities

Geopolitics has been a double-edged sword for crypto this month, amplifying volatility while underscoring its role as a “geopolitical asset” for hedging uncertainty.

Themes we’re watching:

• U.S. Political Instability: Ongoing tensions between President Trump and Fed Chair Jerome Powell over interest rates have fueled risk-off moves, but also positioned BTC as a safe haven amid fiat uncertainty.

• Trade Wars Escalate: U.S.-EU tariff threats over Greenland sparked a brief BTC dip below $93,000, wiping billions from the market.

• Global Conflicts:

  • Venezuelan regime change added short-term resilience tests, but historical data shows such events often have fleeting impacts.

  • Iran regime change is also on the cards, keep an eye on crypto predictions markets like Kalshi.

The inflation outlook has been softening too, not only will the 1 year base effects of tariffs roll off in the next few months, forward looking tools like Trulfation predict a serious deflation impulse very soon, giving the Fed more room to cut.  

BTC ETF Flows: Institutional Revival

One of the brightest spots YTD has been the resurgence of Bitcoin ETF inflows, signaling institutional confidence is back after a late-2025 lull. U.S. spot BTC ETFs pulled in $1.42B last week, the strongest since October 2025, bringing YTD totals to about $1.2B.

BlackRock’s IBIT led the charge, capturing ~$1B weekly and $648M in a single day on Jan 15. Fidelity’s FBTC and others like ARKB followed suit, with flows extending to ETH ($479M weekly) and SOL ETFs continue to consistently accumulate.

This institutional rotation, likely fueled by portfolio rebalancing and non sovereign hedging, has propelled BTC past key resistance levels, with analysts eyeing $95K-$97K as the next near-term target.

MSTR has also resumed buying, after receiving a green light from MSCI that it would not be removed from MSCI indicies Saylor has purchased a further ~15,000 BTC, and teased another large purchase is imminent.

Clarity Act: Progress stalls on Stablecoin Yields

Regulatory clarity remains a work in progress. The Clarity Act hit a snag after the Senate Banking Committee’s Jan 15 markup was postponed following industry pushback, particularly around provisions that would restrict or prohibit stablecoin yields.

The debate looks straightforward:

• Banking lobby view: yield-bearing stablecoins can resemble uninsured deposits and may increase run risk.

• Crypto/fintech view: banning even activity-based rewards (staking, liquidity provision, distribution mechanics) limits innovation and consumer choice.

With a large number of proposed amendments (including DeFi perimeter questions and surveillance/privacy concerns), near-term timing remains uncertain. Our base case remains that a compromise framework is achievable given broad bipartisan interest, but the path may be uneven, with legislative timing potentially drifting toward mid-2026.

Looking Ahead: Cautious Recovery and Increasing Activity

Despite the headwinds, 2026 is increasingly shaping up as the “dawn of the institutional era.” ETF flows, on-chain innovation, and the growing appeal of non-sovereign hedges are all supportive, even if volatility remains the admission price.

Our core thesis remains intact: Bitcoin’s “IPO moment” is still playing out, and ETFs must continue absorbing sell-side pressure as long-term holders take selective profits.

Near-term catalysts we’re watching:

• early-season U.S. liquidity dynamics (including tax-related flows),

• BTC’s path back toward the $100k handle,

• stablecoin/CLARITY progress,

• and potential rotation toward utility over hype, with privacy and prediction markets still the clear “meta” themes.

With improving market structure, the prospect of easier financial conditions, and an administration incentivised to keep growth strong into the mid-terms, the setup for BTC and digital assets looks constructive. We also expect volatility, but continue to view it as something to patient through and selectively buy on dips.

If you’d like to learn more about the MTC Digital Asset Fund or the MTC Bitcoin and Gold Fund, reach out to myself or the team. The asymmetric opportunity gets stronger every day. 

🗓️ Key dates to watch

• 22 Jan – US GDP Growth rate

• 23 Jan – Core PCE

• 29 Jan – Fed Interest rate decision

• 3 Feb – ISM PMI

• 5/6 Feb – Jobs data JOLTS and Non farm payrolls

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