Cryptocurrency prices are showing signs of recovery on Jan. 2, easing some of the selling pressure that dominated late December.
The total crypto market capitalization rose 1.2% to $3.08 trillion. Bitcoin was trading around $88,678 at the time of writing, up 1.3% over the past 24 hours, with price action remaining range-bound but constructive.
Altcoins outperformed BTC in early trading, reflecting renewed speculative interest. Cardano (ADA) gained 6.3% to $0.3553, Sui (SUI) rose 4.5% to $1.46, and Pepe (PEPE) surged 21% to $0.0548.
Market sentiment improved as well. The Crypto Fear & Greed Index climbed eight points to 28, moving from extreme fear into the fear zone, signaling reduced selling pressure since late December while caution remains warranted.
Derivatives data suggests a cooling of leverage. According to CoinGlass, open interest fell 3.29% to $128 billion, while 24-hour liquidations dropped 46% to $126 million. The average relative strength index (RSI) across the crypto market sits at 56, indicating neutral momentum.
January optimism returns, but volatility risks persist
The early-year rebound coincides with renewed risk appetite amid thin holiday liquidity. Historically, January has favored stronger performance in both crypto and equities, a phenomenon often referred to as the “January effect.”
Part of the recovery is driven by post–tax-loss harvesting flows. Aggressive year-end selling, particularly from U.S. investors, tends to reverse in early January as portfolios are reset. Analysts at Bitwise described the late-2025 drawdown as “mechanical rather than fundamental,” suggesting that forced selling temporarily mispriced assets.
Exchange-traded fund (ETF) flows have also stabilized. Spot Bitcoin and Ethereum ETFs experienced minor outflows in mid-December, but redemptions slowed in late December and early January. Coinbase Institutional noted that many allocators opted to pause rather than fully exit, waiting for clearer macro signals before increasing exposure.
Broader sentiment has benefited from easing macro pressure, with no new geopolitical shocks and growing expectations of U.S. rate cuts later in 2026. Risk appetite is gradually returning, albeit cautiously.
Short-term outlook and analyst expectations
Analysts anticipate Bitcoin consolidating between $85,000 and $93,000 in the near term, with downside risk toward $84,000–$87,000 if liquidity thins.
If BTC sustains levels above $90,000, it could target $100,000–$105,000 later in January, particularly if ETF inflows accelerate and macro conditions remain supportive. A break above these thresholds may signal renewed market momentum.
Grayscale, Bitwise, Coinbase Institutional, and Galaxy Research all maintain an optimistic outlook for 2026, viewing the late-2025 correction—when Bitcoin ended the year about 6% lower—as a temporary reset rather than a reversal of the broader uptrend.
Ready to start trading Forex? Join iXBroker today and kick-start your trading journey now!
