📆 The crypto market begins its new year

The year 2025 marked a new step in the maturation of the crypto market. Following the institutional breakthrough of Bitcoin spot ETFs in 2024, the role of those funds as a key investment instrument was strengthened. Billions in institutional capital flowed into the market via regulated products, increasingly establishing Bitcoin as a strategic store of value.

At the same time, the question of custody became a central subject of debate. As institutional involvement grew, it became increasingly clear that true sovereignty in the crypto space could only be achieved in self-custody – the only model that guarantees ownership, independence, and control.

In parallel, structural scarcity continued to increase after around 95% of all possible bitcoins had been mined, a milestone that further underpinned the narrative of digital scarcity.

Bitcoin also continued to gain political significance as discussions about strategic reserves, government Bitcoin holdings, and tax treatments showed that digital assets are increasingly becoming part of geopolitical and fiscal considerations.

2025 was also the year when stablecoins clearly took the role of backbone of the next generation financial infrastructure, from cross-border payments to tokenized capital markets. At the regulatory level, the year was also marked by greater clarity in both the US and Europe, where frameworks were refined to enable innovation without losing sight of systemic risks.

Overall, 2025 was a year of consolidation, professionalization, and institutional anchoring for the crypto market, less defined by euphoria and more by structural progress.

🎭 Bitcoin and systemic crises

Bitcoin celebrated its "Genesis Day" at the beginning of January, while US national debt reached a new record high of $38.5 trillion. The symbolic coincidence is hard to overlook: when Satoshi Nakamoto mined the first Bitcoin block on January 3, 2009, he embedded in the code the following headline:

"Chancellor on brink of second bailout for banks"

Today, 17 years later, US debt is growing by around $6 billion per day. In 2025 alone, approximately $2.2 trillion were added. The M2 money supply also rose to around $22.4 trillion. For many Bitcoin advocates, this is a convergence of the structural conditions that originally gave rise to Bitcoin: rising debt, expansionary monetary policy, and growing mistrust of long-term purchasing power.

Iran shows how quickly this mistrust can spill over into social debates. Since June 2025, the country's currency has lost more than 40% of its purchasing power, falling at times to around 1.4 million rials per US dollar. Banking crises, the collapse of Ayandeh Bank with billions in losses, and increasing political tensions have exacerbated the loss of confidence.

In this environment, Bitcoin increasingly emerged as a possible "exit narrative" – less as a mass solution and more as a reference for alternatives outside of government monetary systems. Similar patterns had previously been observed in Argentina, Lebanon, and Turkey: currency crises increase attention to digital assets, even if high volatility, technological hurdles, and regulatory risks stand in the way of widespread use.

As economic pressure intensifies, political control remains fragile. Hedge fund manager Ray Dalio warns that the 2026 US midterm elections could upset the balance of power in Congress and block the Trump administration's crypto-friendly regulatory approaches. In particular, the CLARITY bill on market structure is likely to be delayed until 2027.

Prediction markets see the probability of a change in the majority in the House of Representatives at around 79%. At the same time, President Trump explicitly ruled out pardoning former FTX CEO Sam Bankman-Fried. The signal is ambiguous: political proximity to the industry exists, but remains tactical – and reversible at any time.

A counter-movement in monetary policy is also forming. In the EU, the Parliament, Commission, and ECB are wrestling with the digital euro. "Cash-like data protection" is considered the most difficult compromise between privacy, anti-money laundering, and system stability. The plan is to create a hybrid online/offline model with legal payment characteristics, holding limits, and operationally enforceable data protection rules.

The OECD's Crypto-Asset Reporting Framework (CARF) has also entered into force in 48 countries (but not yet in Switzerland), where crypto service providers have begun on January 1st 2026 to systematically collect transaction data, which will be exchanged between OECD states starting in 2027. The goal is to combat tax evasion and money laundering – but critics point to the creation of unprecedented data sets on ownership and transaction structures.

All in all, the context in which Bitcoin evolves is shifting. Government debt, currency crises, digital central bank currencies, and global tax regimes are bringing monetary systems in the spotlight, and with them the role of a non-governmental, scarce, and cross-border asset.

What is striking is not the individual factors, but their simultaneity: debt expansion, currency stress, and new control infrastructures are all happening at the same time. CBDCs and CARF are not aimed at easing the market, but at deeper institutional penetration of digital financial flows. Bitcoin does not stand in opposition to this trend as a ready-made alternative, but rather as a frame of reference. The actual debate is thus shifting from questions of price to questions of system: trust, sovereignty, and the future architecture of money.

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🔎 Mixed signals from institutional investors

The institutional start of the crypto year 2026 has been contradictory. While spot Bitcoin ETFs recorded net outflows of around $681 million in their first full week of trading, large investors, banks, and index providers are simultaneously sending signals of structural consolidation.

After a brief start of the year with strong inflows, the trend quickly reversed. Between Tuesday and Friday, Bitcoin ETFs recorded net outflows for four consecutive days. On Wednesday alone, $486 million flowed out, followed by another $398.9 million on Thursday and $249.9 million on Friday. On a weekly basis, the balance remained clearly negative.

Spot Ethereum ETFs also closed the week with net outflows of around $68.6 million. Market participants point to macroeconomic uncertainty as a key factor. According to Kronos Research CIO Vincent Liu, declining expectations of short-term interest rate cuts and rising geopolitical risks are weighing on risk appetite. Investors are waiting for clearer signals from US monetary policy and inflation data before directing new capital into risky assets.

At the same time, however, on-chain data paints a different picture on the supply side. BlackRock expanded its Bitcoin position by around 9,600 BTC in the first week of January – an additional purchase worth just under $900 million.

The world's largest asset manager thus holds around 780,400 BTC. At the same time, the activity of long-term holders fell to its lowest level since 2017. The "Coin Days Destroyed" metric on Binance signals that old coins are hardly being moved on exchanges. While short-term market participants are realizing losses, long-term holders remain largely inactive.

While ETF flows fluctuate, banks are expanding their product architecture. Morgan Stanley applied for three new crypto ETFs within a few days: for Bitcoin, Solana, and an Ethereum spot ETF with an integrated staking component. The planned Ethereum fund is to stake part of its holdings through third-party providers and generate additional income.

The move follows the opening of the company's in-house asset management for crypto products and signals that Morgan Stanley does not view the market as merely a short-term sales opportunity. Analysts point to strategic motives: positioning as a crypto-savvy player, talent acquisition, strengthening its E*TRADE brokerage platform, and preparing for tokenization and new customer segments. Even with moderate inflows, the reputation and infrastructure effect could be more decisive for the institution than the ETF volume itself.

Institutional decisions are also becoming more prevalent at the stock and index level. MSCI decided not to exclude so-called digital asset treasury companies from its global indices for the time being. This means that companies in which digital assets account for more than 50% of the balance sheet will remain investable for passive index funds. This is crucial for Strategy and other crypto treasury companies, as exclusion would have triggered billions in forced outflows. At the same time, MSCI announced an in-depth review to distinguish more clearly between operating companies and primarily investment-driven structures in the future. The case shows that the capital market is increasingly grappling with the question of how crypto treasuries should be classified in terms of regulation and index logic.

Overall, the picture is mixed. Short-term ETF outflows reflect macroeconomic caution, while large asset managers are accumulating assets, banks are expanding their product ranges, and index providers are continuing to integrate crypto structures into the traditional capital market architecture.

The institutional market is visibly moving away from simple price narratives. ETF flows are reacting tactically to macro signals, while structural players are expanding their positioning, infrastructure, and regulatory frameworks. BlackRock's accumulation, Morgan Stanley's product strategy, and MSCI's index decision point to a deeper process. Crypto is no longer just being traded, but is becoming organizationally anchored. Short-term outflows therefore say less about confidence than about liquidity cycles – the real movement is taking place at the level of market architecture.

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📊 Bitcoin mining under pressure, treasuries keep growing

At the start of the year, the supply side of the Bitcoin market presents a complex picture. While the mining sector is cautiously stabilizing after one of the most difficult years in its history, corporate and treasury players are continuing their accumulation strategy, thereby shifting the balance within the ecosystem.

The Bitcoin mining difficulty fell slightly to around 146.4 trillion in the first adjustment of 2026. This is the first downward movement after a series of all-time highs in 2025. Despite the slight easing, the difficulty level remains high, and a moderate increase is already expected again on January 22, as the average block times are currently slightly below the target value at 9.88 minutes. Structural competition in the network thus remains intense – and economically tense.

2025 was one of the toughest years ever for miners. The halving in April 2024 cut block rewards in half, while macroeconomic pressure, regulatory uncertainty, and the market crash in the fall further squeezed margins.

The miner hash price fell below $35 per petahash at times in November, well below the profitability threshold of around $40. During this phase, many operators had to decide whether to shut down equipment or accept losses. Additional pressure came from trade tariffs imposed by President Trump, which triggered fears of supply bottlenecks and rising hardware costs. Although the price of Bitcoin has since recovered, it remains well below the all-time high of over $125,000 reached in October.

While the production side was under pressure, corporate treasuries moved in the opposite direction. Strategy opened 2026 by purchasing 1,287 BTC for $116 million, increasing its holdings to 673,783 Bitcoin. The purchase was financed through the sale of new shares. The company also expanded its cash reserves to $2.25 billion. The move came despite Strategy reporting an unrealized book loss of $17.4 billion for the fourth quarter of 2025, triggered by the price decline in late fall. Despite this burden, the company is sticking to its aggressive accumulation strategy. Listed companies now hold a combined total of around 1.09 million BTC - more than 5% of the maximum total supply.

Tether also expanded its position. The stablecoin issuer purchased 8,888 additional bitcoins at the turn of the year, increasing its disclosed reserves to over 96,000 BTC. This gives the company the fifth-largest known Bitcoin wallet. The purchases are in line with an internal strategy to invest up to 15% of quarterly profits in Bitcoin.

Tether increased its gold reserves as well, by 26 tons in the third quarter of 2025. The combination of government bonds, gold, and Bitcoin increasingly brought the company to the attention of rating agencies. S&P recently downgraded USDT due to transparency and concentration risks, while market observers are critically discussing the growing importance of Bitcoin within Tether's reserves.

This picture is complemented by speculative narratives from the market environment. Jan3 founder Samson Mow predicts that Elon Musk will "go all in on Bitcoin" in 2026, while renewing his extremely optimistic price targets.

At the same time, other industry representatives such as Bitwise CIO Matt Hougan point to a much more sober scenario with solid but less spectacular returns in the long term. The contrast underscores how strongly the debate has shifted between real supply shortages caused by Treasuries and continuing highly volatile expectations narratives.

Overall, it is clear that while miners are struggling for efficiency and survival after a historic year of margins, Bitcoin holdings are increasingly shifting from the production sphere to the balance sheet sphere. Corporate and stablecoin players are increasingly emerging as structural owners.

The pressure on miners is not a marginal phenomenon, but rather a filter. High difficulty, declining margins, and geopolitical cost factors are accelerating selection on the production side. At the same time, treasury players are pooling capital, liquidity, and supply power. Bitcoin is thus less characterized by new coins than by their distribution. Supply dynamics are shifting from hashrate to balance sheets, a structural transition that is likely to be more relevant in the long term than short-term difficulty cycles.

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🌤 Market sentiment recovers while usage booms

After months of pronounced fear, cautious stabilization is returning to market sentiment for the first time. At the beginning of January, the Crypto Fear and Greed Index returned to "neutral" for the first time since the October crash, rising to a value of 40. Investors are thus no longer clearly in fear mode – but the market is still far from optimism.

The shift in sentiment follows one of the hardest breaks in the cycle. After reaching an all-time high of over $125,000 in October, Bitcoin plummeted to around $80,000 within a few weeks. Altcoins were hit even harder: the market capitalization of the rest of the crypto market collapsed by around 33% in a single day. The Fear and Greed Index fell to 10 at times in November, which is the "extreme fear" level.

The current neutrality signals one thing above all: the shock has been processed, but the uncertainty has not disappeared. Observers continue to point to geopolitical tensions and a noticeable reluctance on the part of private investors as factors weighing on the start of the year.

This fragile situation was also evident last weekend. Despite a large-scale US attack on Venezuela, the price of Bitcoin remained stable and even went up slightly at times, a behavior that is atypical for traditional risky assets. Market observers see the reaction as an indication that some of the panic-driven selling may already be over. There is currently a disagreement as to whether this already points to a resilient trend or whether the reaction was merely an expression of short-term market calm.

However, within this neutralized overall picture, diverging signals from the Ethereum ecosystem stand out. According to Santiment, the current sentiment surrounding Ether is similar to the phases that preceded the strong rally in 2025. Analyst Brian Quinlivan points out that Ethereum has historically often gained momentum when public expectations and market interest have cooled significantly. Although the ETH price is around 36% below its all-time high, Ethereum is now clearly considered the established number two in the market. Institutional players are increasingly classifying Bitcoin and Ethereum as core components of crypto portfolios, rather than speculative outsiders.

In the meantime, the fundamental contrast between market price developments and actual usage is striking:

In the fourth quarter of 2025, stablecoin transactions worth over $8 trillion were processed on Ethereum – almost twice as much as in the second quarter. The number of daily transactions reached an all-time high of around 2.23 million at the end of December, with active monthly addresses rising to 10.4 million. Ethereum continues to dominate stablecoin processing and the tokenization of real assets, with a market share of around 65% of the total on-chain RWA value. More than half of all stablecoins in circulation are now moved via Ethereum.

The mood therefore remains divided. On the surface, caution prevails, but beneath the surface, economic activity continues to increase.

The shift into neutral sentiment territory marks less of a trend reversal than a psychological relaxation. Fear no longer dominates, but neither does confidence. What is striking is the growing discrepancy between market sentiment and network reality. While investors are still waiting, payment channels, stablecoin flows, and on-chain activity are at record levels. This divergence points to a phase in which fundamentals are becoming increasingly difficult to reconcile with traditional market psychology.

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💻 Ethereum as the money operating system

Last week, Vitalik Buterin compared Ethereum to Linux: an open operating system that functions not as a finished product, but as a global infrastructure. Just like Linux serves billions of users and organizations as a freely customizable system, Ethereum, as an open Layer 1 platform, is intended to form the foundation for financial applications, identity, social systems, and governance on the Internet, without dependence on intermediaries. At the heart of this is the idea of a decentralized "operating system for value, computing power, and consensus."

This vision is reflected in Ethereum's modular architecture. While Linux scales through individual software distributions, Ethereum relies on a growing ecosystem of Layer 2 networks. According to L2Beat, there are now 127 Layer 2 solutions. Proponents see this as a testing ground for different execution environments, block times, and use cases. Critics, on the other hand, point to fragmentation and declining revenues for the base layer since the Dencun upgrade in March 2024.

Buterin explains that Ethereum has reached a crucial technological milestone: the resolution of the blockchain trilemma. With PeerDAS, which was introduced at the end of 2025, and increasingly operational zkEVMs, it should be possible for the first time to implement scalability, security, and decentralization simultaneously on a blockchain. PeerDAS significantly expands data availability, while zkEVMs are expected to make block validation more efficient and scalable in the future.

Buterin describes this point as the result of a ten-year development phase. The first components are already in production, and further structural adjustments are announced for 2026 and subsequent years, including higher gas limits, changes to the execution logic, and, in the long term, a stronger role for zkEVMs in block validation. The goal is a network that offers both high bandwidth and robust decentralization, laying the foundation for a permanently scalable Ethereum.

Buterin's Linux comparison is more than just an image, it shifts the yardstick by which Ethereum wants to be measured. The focus is not on short-term revenues from the base layer, but on its role as a neutral infrastructure. The growing Layer 2 landscape and advances in PeerDAS and zkEVMs suggest that Ethereum is technically entering a new phase. But it remains to be seen whether fragmentation, governance complexity, and economic incentives are compatible with this operating system logic in the long term. Whether Ethereum truly becomes "Linux for value and trust" will be decided less by narrative than by its ability to keep this modular vision stable, interoperable, and secure.

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