Recent market dynamics and direct impacts
This morning (January 26), global risk assets faced a sell-off:
· Cryptocurrency market: Bitcoin once fell below $86,500, dropping more than 3% in 24 hours; Ethereum dropped to around $2,800, with a decline of over 5%. In the past 24 hours, over 200,000 people globally faced liquidation, amounting to $664 million.
· Related markets: U.S. stock index futures and the U.S. dollar index fell simultaneously, while gold broke through $5,000/ounce for the first time, and silver also hit a new high.
Core influencing factors: Three major geopolitical and economic events
This severe fluctuation was mainly triggered by the following three sudden geopolitical and economic events:
1. The trade relationship between the US and Canada is escalating tensions
· Event: Trump threatens to impose a 100% tariff on Canadian goods and withdraws the invitation to the Prime Minister.
· Impact: This move exacerbates global trade uncertainty, dampening market risk appetite and accelerating the withdrawal of funds from high-risk assets (such as cryptocurrencies and stocks).
2. Rare US intervention in the foreign exchange market expected
· Event: The New York Fed inquired about the cost of exchanging yen for dollars, signaling potential intervention in the foreign exchange market, leading to a surge in the yen and a decline in the dollar.
· Impact: This has raised market concerns about 'carry trades' being closed and tightening global liquidity, prompting investors to sell risk assets in search of safe havens.
3. Geopolitical risks in the Middle East are resurfacing
· Event: The US aircraft carrier strike group 'Abraham Lincoln' has arrived in the Middle East.
· Impact: The escalation of regional tensions has directly pushed up the prices of traditional safe-haven assets like gold and silver, while also increasing volatility in all risk markets.
Market fund flow and in-depth analysis
The current market reaction reveals deeper structural changes:
Funds are flowing from the crypto market to traditional safe-haven assets
· Data support: Over the past year, gold has risen by about 80%, silver has increased nearly threefold, while Bitcoin has declined by about 9%. There is a clear divergence in the trends of cryptocurrencies and precious metals.
· Behavioral analysis: Data shows that retail and small holders are continuing to sell cryptocurrencies, while institutional funds are also flowing out (such as significant daily net outflows from Ethereum ETFs). This has collectively led to tightening market liquidity and price pressure.
The 'bottom signal' of the crypto market is not yet complete
Although price declines and retail exits are often seen as signals of market bottoms, some key indicators of 'bottoming' (such as a spike in realized losses and large-scale long liquidations) have not yet appeared. This suggests that downward pressure may not be fully released, and the market may need more time to bottom out.
Comprehensive analysis of the crypto market trend
Overall, the market is being pulled between short-term panic, mid-term uncertainty, and long-term positives.
Short term (next few weeks): cautious bearish, primarily volatile
· Core contradiction: The risk aversion sentiment triggered by geopolitical conflicts and trade frictions is the core force dominating the current market. If the situation continues to deteriorate, the crypto market will face further selling pressure.
· Observation point: Close attention should be paid to the developments of the above three major events, as well as whether the crypto market will experience a true 'panic sell-off' (such as a surge in liquidation volume and pessimistic expectations flooding social platforms), which may signal the exhaustion of bearish forces.
Mid-to-long term (next few months): Structural support remains strong
· Policy benefits: Despite short-term macro shocks, the mid-to-long-term policy environment for cryptocurrencies is improving. The Trump administration has expressed support for the crypto industry, and relevant market structure legislation in the US is also expected to be introduced.
· Traditional finance entry: Wall Street giants (such as BlackRock) and traditional banks (such as UBS) are accelerating their embrace of blockchain technology, with asset tokenization seen as the next multi-trillion dollar market. This provides a long-term growth story for the crypto economy.
· Technical support: From a technical analysis perspective, the $88,000 - $90,000 range is considered a key support zone and 'institutional cost line' for Bitcoin. The current price is approaching this area and may attract medium-to-long term buyers to enter the market.
Current operational thinking reference
In the face of a highly uncertain market, maintaining patience and discipline is more important than accurately predicting turning points.
· Core principle: Avoid emotional trading during extreme panic or optimism. Current market noise is significant, and decisions should be based on data rather than emotions.
· Position management: Consider adopting a 'core + satellite' position strategy. Use a major position (such as 40-50%) to gradually invest in Bitcoin and Ethereum; use a small portion of the position (such as 10-15%) to look for undervalued quality altcoin opportunities.
· Key signals:
· Turning to positive signals: Signs of easing geopolitical tensions; the crypto market is experiencing clear 'surrender-style' sell-offs (such as surges in daily liquidation volume); ETF funds are resuming continuous net inflows.
· Signal of increased risk: Escalation of geopolitical conflicts in the Middle East; US inflation data exceeding expectations leading to the Fed delaying interest rate cuts; major cryptocurrencies breaking through key technical support levels (such as Bitcoin $83,000-$85,000).
Overall, the volatility at the beginning of 2026 sets a high-volatility tone for the year. Cryptocurrencies are in a growing pain period transitioning from fringe assets to mainstream financial infrastructure, constrained by traditional macro factors in the short term, but the long-term growth logic remains unchanged.
