Why analysts say Q1 2026 crypto rally is back on the table!

ambcryptoPublished on 2026-01-09Last updated on 2026-01-09

Abstract

Coinbase analysts are optimistic about a crypto market recovery in early 2026, noting that the December sell-off has ended and systemic leverage has dropped significantly. This reset, alongside renewed inflows into Bitcoin and Ethereum ETFs, suggests rising institutional interest. On-chain data from Glassnode shows an 82% drop in selling pressure, while improved macro liquidity conditions—including a positive shift in the Fed balance sheet and potential stimulus measures—support a bullish outlook. Bitfinex whale positioning also indicates potential upward momentum for BTC, which could positively impact altcoins. Key upcoming events like inflation data and crypto legislation may influence the recovery trajectory.

Coinbase analysts are optimistic about a crypto market recovery in early 2026. In the firm’s weekly update, the analysts stated that the December sell-off was over, resetting the market for a likely relief bounce in Q1.

The systemic leverage also dropped to 3% of total crypto market cap, up from the frothy levels of 10% seen in 2025, the analysts noted. This meant a healthy reset after flushing out excess leverage, conditions that could drive a sustainable recovery.

Additionally, Coinbase highlighted that renewed Bitcoin[BTC] and Ethereum[BTC] ETFs inflows, along with options data, pointed to a “rising appetite for upside exposure.”

“With liquidity returning post-holidays, early flows suggest institutions are cautiously re-risking.”

Will 2020 liquidity style fuel a crypto rally?

A similar positive outlook was also shared by on-chain analysis firm Glassnode, citing an 82% drop in selling pressure.

The level of daily average profit-taking in late 2025 rose above $1 billion but has eased to $183 million in early 2026. Per the analytics firm, this was a positive setup for a rebound.

The liquidity and macro landscape were also great for a recovery.

According to analyst James Easton, the Fed balance (which tracks liquidity levels) has flipped green for the first time since 2023.

This meant improved liquidity, a trend that triggered the explosive BTC rally in 2020.

Additionally, the recent plan by President Donald Trump to purchase $200 billion in mortgage bonds has been viewed as a net liquidity injection and a positive for BTC.

In fact, JPMorgan also shared a bullish outlook for liquidity and markets for 2026.

For his part, BitMEX founder Arthur Hayes projected that this was one of the key catalysts that could rally BTC to $1 million per coin.

Bitfinex longs suggest...

Another dataset that supported the bullish case for BTC was the Bitfinex longs, or whale positioning.

In the past, Bitfinex exchange whales would scale long exposure during market dips and ease or exit during rallies. The trend has perfectly correlated with past BTC price action, and the last time Bitfinex longs eased bids, the BTC price increased by 35%.

A broader BTC lift-off could also boost the altcoin market, which has already recorded a significant recovery in early January. Meanwhile, at press time, BTC traded at $91K ahead of next week’s inflation data and crypto bill markup.

Final Thoughts

  • The liquidity landscape and crypto market reset suggested a likely rebound in early 2026
  • It’s unclear whether next week’s inflation data and crypto bill markup outcomes will affect the recovery odds.

Related Questions

QWhat is the main reason Coinbase analysts are optimistic about a crypto market recovery in Q1 2026?

ACoinbase analysts are optimistic because the December sell-off is over, which has reset the market for a likely relief bounce. Additionally, systemic leverage has dropped to a healthy 3% of the total crypto market cap from frothy levels of 10% in 2025.

QAccording to the article, what two key factors point to a 'rising appetite for upside exposure' in the crypto market?

ARenewed Bitcoin and Ethereum ETF inflows, along with options data, point to a rising appetite for upside exposure.

QWhich on-chain analytics firm reported an 82% drop in selling pressure, and what specific metric did they cite as a positive setup for a rebound?

AGlassnode reported an 82% drop in selling pressure. They cited that the daily average profit-taking eased from over $1 billion in late 2025 to $183 million in early 2026 as a positive setup for a rebound.

QWhat historical event does analyst James Easton compare the current improved liquidity to, and what specific indicator did he use to track liquidity levels?

AJames Easton compared the current improved liquidity to the explosive BTC rally in 2020. He used the Fed balance sheet, which tracks liquidity levels and has flipped green for the first time since 2023.

QWhat is the significance of the trend observed in Bitfinex longs, and what was the result the last time this pattern occurred?

AThe trend on Bitfinex, where whales scale long exposure during market dips and ease during rallies, has perfectly correlated with past BTC price action. The last time Bitfinex longs eased their bids, the BTC price increased by 35%.

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