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

As the market disturbances gradually subside 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 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 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 sentiment, the market quickly digested it 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 approximately +5% since the beginning of the year; ETH saw a rise of about +6% during the same period. This trend is supported by three overlapping forces:

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

• Easing Tax Loss Selling Pressure: The concentrated selling pressure from U.S. investors realizing capital gains tax losses significantly weakened at the beginning 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 evidence for the market's stabilization and recovery: Exchange balances continue to decline: BTC and ETH are consistently net 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 there is more "ammunition" available for purchasing crypto assets, providing liquidity support to the market; 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 a near two-year low, 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) concentrated distribution: A large number of options open positions are concentrated around key price levels near the current spot 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 Stages, Optimize Risk and Return

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

• Expecting Range: If expecting the market to continue consolidating within a range, consider strategies like FCN/dual currency, which can generate fixed coupons by "selling volatility" within specific price ranges, 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 knockout conditions to control upside risk, suitable for gradual positioning.

• Bullish or Hedging: If holding spot and wishing to take profits in batches at higher levels, or needing to hedge short-term risks, consider Decumulator/call options, where the former can automatically sell in batches, and the latter can enhance spot returns while partially locking 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 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 constitute 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 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; investment requires caution. 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.