Mid January Reality Check: Is Crypto Warming Up or Cooling Off?
As we cross the halfway mark of January, this is a good time to reflect and assess the signals the crypto markets are telling us about the sustainability of the current momentum.
While the fact remains that it is still too early to call for any sort of confirmed long term bullish structures, the early building blocks are starting to fall into place.
The total crypto market since the start of the year is up around 9%. This comes after an underwhelming quarter 4 where we saw the total sector experience a compounded drawdown of roughly 24%. Currently, the crypto community and analysts sit on two different schools of thought. On the one hand, we have those who firmly believe that the crypto 4 year cycle is intact and that an extended bear market is due. On the other lies those who believe that macro trends tied to the business cycle and the new dynamic of steadier, large-scale institutional demand have effectively erased the cycle thesis.
2026 thus far has leaned closer to the latter camp. That said, it’s crucial to note that these are just early signals of a positive trend. The more sustained actions discussed in this article will need to persist over a longer period before any firm conclusions can be drawn.
Price Action Shows Broad-Based Momentum
At the time of writing, the top ten cryptocurrencies by market cap are averaging around 10% gains year to date. Zooming out beyond the top ten through the lens of the OTHERS chart shows a similar picture, with YTD gains averaging at 10.40%. By mid-January, price action is no longer dominated by thin liquidity, positioning resets, or calendar effects that often distort day-one moves. Instead, it begins to reflect more durable conviction and follow-through, making these trends far more meaningful.
Together, this indicates that there has been a broad-based strength rather than a rally driven by a narrow subset of tokens. This is not to say that there have not been outperformers. The breakout sectors since the start of the year include bitcoin ecosystem projects, cross-chain bridges and privacy coins.
Volume and Participation Being Reassessed
When we assess spot volumes, the year has started with a gradual but uneven pick up in activity with January 15th seeing the largest volume of $374.03B. This week (11th to 16th) in particular is showing some signs of an uptick. A similar pattern emerges within the derivatives market as well with perp volumes reaching its highest level on January 15th at $1.46 Trillion.
The uneven spikes in both spot and derivatives volumes suggests that we are seeing a market that is tentatively re-engaging rather than fully committing. This behaviour points to a broader wait and watch mode, with participants holding back as key structural confirmations are yet to play out.
Institutional Signals are Heating Up
Where conviction appears more pronounced is within crypto spot ETFs, which are starting to reflect a clearer institutional stance. Bitcoin and Ethereum Spot ETFs this week have seen uninterrupted inflows with BTC clocking in $1.81 billion in weekly net inflows so far while ETH weekly net inflows stand at $474.50M. For both Bitcoin and Ethereum, these volumes of inflows have not been seen since October 10th. It is, however, important to note that one trading day remains, leaving room for flows to shift before the weekly close.
What Would Tip the Balance
From a purely technical point of view, BTC is currently trying to reclaim the 50 week Exponential Moving Average (EMA). This indicator has acted as support for bulls multiple times this cycle. As we approach the weekend, a successful weekly close above this level, which sits at $97,500, would significantly strengthen the bullish case.
Apart from a trend continuation in ETF flows, we’ve started to see a deceleration of selling amongst Bitcoin long term holders.
A continued reduction in sell side pressure from this group will make it easier for the steady demand to support a more durable upside move.
