The Next Market Pulse: 18th Edition

Jobs report – The Labor Department’s December 2025 non‑farm payroll data showed U.S. job growth slowing to about 50 k jobs versus expectations of ~66k, while the unemployment rate fell slightly to 4.4 %.  Wage gains were modest, supporting bets that the Federal Reserve will keep interest rates steady at its January 27–28 meeting.

Macro risk backdrop – Analysts highlighted that the market faces potential macro shocks in 2026, including a looming change of Fed leadership (Powell’s term ends in May 2026), U.S. political risk and fears of an AI‑driven bubble .  These risks, combined with hawkish tones in the Fed’s minutes, pressured crypto prices during the week.

Consolidation after early‑year rally – CF Benchmarks’ weekly index summary noted that after a strong start to 2026, crypto markets consolidated.  Bitcoin fell −2.97% week‑on‑week but still held a +3.32 % year‑to‑date (YTD) gain, while Ether declined −1.86% (YTD +4.46%).  Performance across the single‑asset basket ranged from Solana’s +2.29% to Cardano’s –3.69%, signaling rotation rather than capitulation.  This pullback is “proportionate” and consistent with early‑year positioning rather than a regime change.

Sector dispersion – Infrastructure tokens outperformed (+4.18%) while programmable (-0.62%) and non‑programmable (-2.35%) sectors lagged; culture (-3.93%), utility (-3.41%) and finance (-3.12%) were weakest.  Polygon (POL) gained 33.96%, countering Helium’s –9.85% decline, illustrating the breadth of sector performance.

Capitalization tiers – Market‑cap‑weighted indices declined only ~2.13% to 2.64% and remained positive YTD (4.40% – 7.15%).  CF Broad Cap and Large Cap indices both fell just over 2%, underscoring the theme of consolidation rather than reversal.

Volatility trends – The CME CF Bitcoin Volatility Index fell from 45.94 to 42.21 (–8.12%) even as realized volatility ticked up slightly.  The implied/realized volatility gap narrowed, indicating that option markets priced in less tail risk while spot markets digested the –2.97 % weekly drop.

ETF flows flip negative – After more than $1 billion of net inflows in the first two trading days of 2026, U.S. spot Bitcoin ETFs saw a net outflow of $1.128 billion over the next three days, nearly wiping out early gains.  Analysts noted that the shift reflected weakening institutional confidence and that upcoming U.S. employment data and Supreme Court rulings could further sway sentiment.

Liquidations & sentiment – Crypto‑focused blogs reported total liquidations of ~$460 million during the week, with leveraged traders hit hardest during a brief pullback.  Despite the drawdown, support around $90k held and sentiment shifted from “fear” to “extreme fear,” hinting at a consolidation phase.

Bitcoin technicals – Bitcoin was trading near $90,800, down 0.32% on Jan 12th.  The price made a false breakout of support at US$90,244; if the daily bar closes above that level, a bounce toward $92,000 is likely.  Low volume means neither buyers nor sellers control momentum, suggesting sideways trading between $89k and $92k.

Memecoin surge – A Jan 5 Cryptopolitan report highlighted a 23% rise in memecoin market capitalization, as Dogecoin surged 20.8%, Shiba Inu 19.9% and PEPE 65%, while Bitcoin and Ether still gained about 5% and 7.3% respectively.  This speculative rally contributed to liquidity rotation early in the week.

Bank of America opens crypto recommendations – Starting Jan 5th, Merrill and Merrill Edge advisers can recommend crypto exchange‑traded products.  Bank of America said a 1–4% digital asset allocation could be appropriate for clients, signaling mainstream acceptance.

Rain raises $250 million – Stablecoin payments firm Rain closed a $250 million funding round led by ICONIQ Growth, valuing the company at $1.95 billion.  Rain’s active card base has grown 30× and its annualized payment volume 38×, demonstrating growing demand for stablecoin‑based payments.

BitGo files for IPO – Custody provider BitGo filed to raise up to $201 million in its U.S. IPO, targeting a valuation around $1.96 billion.  The offering would make BitGo one of the first major crypto custodians to list publicly and highlights investor appetite for infrastructure plays.

Barclays invests in Ubyx – U.K. bank Barclays bought a stake in Ubyx, a U.S. stablecoin‑settlement company that reconciles tokens from different issuers.  Barclays said the investment allows it to explore “new forms of digital money”, underscoring banks’ interest in stablecoin rails.

Stablecoin platform Rain (again) and World Liberty Financial – The Trump‑linked World Liberty Financial applied for a national trust bank charter focused on stablecoin operations.  Such charters would let crypto firms hold deposits and issue stablecoins under federal oversight.  Rain’s funding and WLF’s charter highlight the rapid institutionalization of stablecoin infrastructure.

OCC trust bank approvals – On Dec 12th, the U.S. Office of the Comptroller of the Currency conditionally approved five national trust bank charters, including conversions for BitGo Bank & Trust, Fidelity Digital Assets, and Paxos Trust Company and new charters for First National Digital Currency Bank and Ripple National Trust Bank.  These approvals (which take effect in early 2026) give digital‑asset firms access to federal banking privileges.

MSCI reverses exclusion plan – Index provider MSCI dropped its plan to exclude companies holding digital assets from its benchmarks and will instead consult broadly with investors; firms with digital‑asset holdings above 50% of assets will continue to be treated as before.

Crypto market structure bill – The Bank Policy Institute reported that negotiations on comprehensive crypto‑market‑structure legislation continue in the U.S. Senate, with a markup scheduled for Jan 15th.  A draft from Democrats would allow exchanges to pay rewards on dollar‑pegged stablecoin transactions but bar rewards on idle tokens.  Republicans proposed amending the Bank Secrecy Act to explicitly designate digital‑commodity intermediaries as financial institutions and creating a working group to combat illicit finance.

GENIUS Act enters force – Commonweal Ventures noted that Congress passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) and President Trump was expected to sign it in early January.  The law provides a federal framework for payment stablecoins, mandating one‑to‑one reserves, monthly reserve disclosures and annual audits for issuers over $50 billion .  It also requires stablecoin issuers to maintain robust anti‑money‑laundering and sanctions programs and restricts non‑financial companies from issuing stablecoins without approval .  The bill responds to concerns that 66% of illicit blockchain traffic occurs in stablecoins and that countries such as Russia and Iran use stablecoins to evade sanctions.

Hyperliquid emerges as DeFi juggernaut – A Fortune profile described how decentralized perpetuals exchange Hyperliquid has become one of the biggest players in crypto despite a team of just 11.  During an Oct 10th flash crash triggered by geopolitical comments, Hyperliquid liquidated over $10 billion of leveraged positions which is more than Bybit ($4.6 billion) and Binance ($2.4 billion).  In the past month the exchange processed ~$140 billion in derivatives volume and generated $616 million in annualized revenue, while its HYPE token reached a market cap near $5.9 billion.  This underscores the rapid growth of on‑chain derivative platforms.

Quantum‑safe Bitcoin testnet – BTQ Technologies launched the Bitcoin Quantum testnet, a fork of Bitcoin that replaces ECDSA signatures with a post‑quantum ML‑DSA scheme.  The testnet invites developers to experiment with quantum‑resistant transactions, reflecting growing urgency for post‑quantum cryptography as quantum computing advances.

Token unlocks digest (Jan 5th – 11th) – Tokenomist’s weekly unlock digest reported that crypto markets stabilised after a quiet start to the year.  Total liquidations fell to $412.91 million and aggregate price action ended the week ~5% higher, supported by the Federal Reserve injecting $31 billion into the banking system.  The largest unlock relative to circulating supply was $LINEA on Jan 10th ($10.08 million, 8% of supply), followed by $HYPE on Jan 6th ($330 million, 5.3% of supply) and $ENA on Jan 5th (~$42 million, 2.1% of supply).  The digest noted that protocol buybacks were concentrated in fee‑generating projects like HYPE and PUMP and that the week’s $1.12 billion in emissions represented a sharp rebound from December’s average.

On‑chain rotation – The digest highlighted notable protocol actions: UNI burned $578 million of tokens, LINEA scheduled an airdrop/unlock, Fluid and ORBS expanded buyback programs, and AAVE proposed distributing non‑protocol revenue to token holders.  These actions illustrate a divergence between fee‑backed, deflationary models and emission‑heavy protocols.

Truebit hack – first major breach of 2026 – Hackers stole 8,535 ETH (≈$26.44 million) from the Truebit platform on Jan 9th, the year’s first major crypto hack.  The firm warned users not to interact with the compromised smart contract and contacted law enforcement.  Chainalysis data shows that $3.4 billion in crypto was stolen in 2025 ($2 billion by North Korea) and that illicit addresses received $154 billion in 2025—up 162% year‑over‑year.  This underscores the growing professionalization of crypto crime.

Betterment data breach – Fintech robo‑advisor Betterment, which offers crypto investments, disclosed on Jan 12th that hackers accessed certain company systems via a social‑engineering attack on Jan 9th.  Names, emails, addresses and phone numbers were compromised, and attackers sent fraudulent notifications promising to triple users’ crypto if they sent funds to a malicious wallet.  Betterment said no customer accounts or passwords were compromised and that the breach was contained.

Rumors of Venezuela’s Bitcoin ‘shadow reserve’ – Following Nicolás Maduro’s capture, Project Brazen claimed Venezuela controlled $60 billion of Bitcoin.  Analysts at Nansen called the figure unverifiable because the report listed no wallet addresses and pointed to estimates of only $22 million in holdings .  Ledn co‑founder Mauricio di Bartolomeo also doubted the claims .  The episode highlights how unverified rumours can influence markets and political narratives.

Impact of the GENIUS Act and upcoming Senate markup on stablecoin issuers – How might reserve requirements, AML obligations and restrictions on non‑financial issuers reshape the competitive landscape and bank/fintech partnerships?

ETF dynamics and institutional positioning – Will the recent $1.128 billion outflow from Bitcoin ETFs persist, or could improving macro data reignite inflows?  Examining flows relative to open‑interest and funding rates may provide clues.

Sector rotations – Infrastructure outperformance versus culture/utility weakness suggests investors are rewarding scaling and revenue models.  Exploring catalysts behind Polygon’s 33.96 % gain or the memecoin surge could provide insights.

Security and quantum readiness – As hacks continue and quantum hardware advances, assessing the readiness of major protocols (Bitcoin, Ethereum, Solana) for post‑quantum cryptography will become a crucial theme.

Emergence of DeFi perps exchanges – Hyperliquid’s rise hints at shifting market share from centralized derivatives to decentralized alternatives.  Investigating liquidity, fees and risk management across platforms like dYdX, GMX and Hyperliquid could illuminate structural trends.