Binance Report: The expectation of accelerated interest rate cuts by the Federal Reserve in 2026 is bullish for Bitcoin, with January potentially being a turning point for bearish momentum

Binance Research pointed out in its cryptocurrency market report that despite the Federal Reserve's easing policies, the cryptocurrency market continues to decline due to cautious investor sentiment. However, as asset management companies continue to increase their holdings, the market dominance of Bitcoin and Ethereum is steadily strengthening. January may become a turning point for bearish momentum as investors consider reallocating from overvalued asset classes back into cryptocurrencies.

In 2025, driven by factors such as monetary easing, AI demand, and a shift towards "commodity control," metals emerged as a standout asset class. Although Bitcoin also benefited from similar macro tailwinds, its performance in the fourth quarter showed divergence due to the lack of a "strategic asset premium." However, this divergence may be temporary: as U.S. legislation pushes to institutionalize strategic Bitcoin reserves and potentially shift from holding seized assets to active fiscal procurement, the valuation framework for Bitcoin is expected to realign with that of strategic metals.

Market participants expect that due to tariff shocks, a weak labor market, and a leadership shift towards dovish policies, easing measures will accelerate in 2026, while demanding a higher long-term premium to compensate for "fiscal dominance" and the impending debt pressure exceeding $50 trillion. The steepening yield curve indicates that the market does not endorse the Federal Reserve's "soft landing" narrative, creating an excellent opportunity for Bitcoin to leverage both the influx of short-term cheap liquidity and benefit from the long-term erosion of fiat credit.

Since their launch, altcoin ETFs have mostly attracted net inflows, with cumulative inflows exceeding $2 billion, led by XRP and SOL, while other assets contributed smaller but stable inflows. In contrast, since October, Bitcoin and Ethereum spot ETFs have consistently experienced net outflows, highlighting the divergence in marginal demand as market momentum slows.

Although it is still in the early stages, the approval of more altcoin ETFs and ongoing inflows may increasingly affect liquidity distribution, especially if broader market inflows accelerate again. In 2025, six newly launched stablecoins surpassed a market capitalization of $1 billion. As stablecoins continue to be adopted globally, their related metrics are increasingly becoming important indicators of global financial activity.