New Fire Research Institute: The New Year market is expected to see dual recovery in liquidity and sentiment

Author: XinHuo Research Institute

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By the start of 2026, the crypto market has gradually shaken off the gloom of the “liquidity vacuum” and “massive sell-off panic” at the end of last year, experiencing a strong recovery in liquidity and sentiment. With large net inflows on the first two trading days of the US spot ETF, the panic and greed index across multiple platforms has also rebounded from the panic zone to a neutral level. BTC and ETH temporarily broke through $93,000 and $3,200 respectively, with small-cap coins rebounding collectively, among which meme coins like PEPE and WIF saw impressive weekly gains of over 60%. Due to the rapid short-term rise, the market may experience technical corrections, but this does not affect the overall upward trend.

XinHuo Research Institute believes that Bitcoin is expected to challenge the $100,000 mark after this correction ends. This level is not only an important daily resistance since the decline began in October last year but also the bull-bear dividing line of this round of market行情. If Bitcoin can sustain above $100,000 with increased volume, it is likely to hit a new all-time high within the year. XinHuo Research Institute reiterates that Bitcoin is expected to challenge the $100,000 mark after this correction, which is both a key resistance level since last October’s decline and the bull-bear boundary of this cycle. If it can hold steady with volume, Bitcoin may set a new record high within 2026.

Q4 2025 Review: Cooling Sentiment and Violent Deleveraging

Looking back at Q4 2025, Bitcoin hit a historic high in early October, followed immediately by an epic crash on October 11. The entire crypto industry’s single-day liquidation was estimated to exceed $40 billion, setting the largest single-day liquidation record since the FTX exchange bankruptcy in 2022. Market liquidity evaporated instantly, causing huge losses for many retail investors and even institutions. The overall market cap of cryptocurrencies fell from a high of $4.2 trillion by 33%, evaporating over $1.4 trillion. Bitcoin retraced from its peak of $126,000 to $80,000, with a maximum decline of 36.13%; Ethereum performed even weaker, with a maximum retracement of 47.07%. The panic and greed index continued to plunge into extreme panic territory, hitting a three-year low.

This decline triggered by liquidity exhaustion, combined with plummeting market sentiment, marked a heavy conclusion to 2025’s crypto market.

2026 New Year Start: Liquidity Returns and Market Sentiment Gradually Rebuilds

Entering 2026, the crypto market has gradually shaken off the gloom of the “liquidity vacuum” and “panic selling” at year-end. In the first week of the new year, both liquidity conditions and investor sentiment experienced dual recovery.

On the capital side, US spot ETFs recorded large net inflows in the first two trading days of the year. After significant adjustments, the current price range’s allocation attractiveness has once again attracted traditional institutional capital and reallocated positions.

More notably, Coinbase’s Bitcoin premium index briefly turned positive from negative. As a barometer of US market sentiment, this recovery indicates that buy demand from the US market is strengthening again.

Meanwhile, the “Panic and Greed Index” across multiple platforms has quickly rebounded from extreme panic to a neutral zone, restoring market confidence.

In terms of market performance, BTC and ETH showed strong rebounds in the first week of the year, temporarily breaking through $94,000 and $3,300 respectively, with double-digit gains over seven days. The stabilization of mainstream coins also boosted the collective recovery of altcoins, with some popular meme coins like PEPE and WIF again becoming focal points for speculative trading, with weekly gains exceeding 60%. This not only outperformed Bitcoin in gains but also signaled a return of profit-making effects in the market.

Future Predictions and Views:

With macroeconomic policies remaining accommodative and the fundamentals of the crypto industry long-term positive, Bitcoin is expected to bottom out in Q1 and re-challenge the $100,000 level. The global economy is entering a cycle of “rate cuts + US dollar depreciation,” with the upcoming US midterm elections, and the Federal Reserve’s monetary policy likely to remain loose, providing long-term benefits for risk assets. As more countries begin to formulate or implement plans to include Bitcoin in their national strategic reserves, this also enhances the credit rating of crypto assets, elevating them from “alternative investments” to “strategic reserves.” Institutions are building dual capital channels into crypto through DAT and ETFs. Substantive application scenarios such as RWA (Real World Assets), stablecoin payments, and cross-border trade settlement are accelerating penetration. Notably, Nasdaq is currently reforming tokenized securities, which will allow tokenized securities to be traded alongside traditional securities on the same order book in the future.

Regarding short-term trends, XinHuo Research Institute believes that due to the recent rapid rebound from the bottom, there is a need for technical corrections and secondary bottoming in the short term. However, this does not change the overall upward trend in the first half of 2026.

Bitcoin is expected to launch a new attack on the $100,000 level after completing this round of consolidation. Additionally, the current unstaking queue for Ethereum has been fully cleared, indicating that short-term selling pressure from unlocks has been exhausted, and a rebound is worth期待. Recently, Solana’s ETF has seen a significant increase in quantity, gradually gaining recognition from traditional funds.