Crypto Market Slides: BTC and ETH Lead Declines Amid Risk-Off Flows

I. Crypto Market Overview

Key Takeaways

Macro Environment

The US Federal Reserve injected $31B liquidity via repo operations, supporting risk assets. The UK and 48 countries enforced CARF, ending crypto tax anonymity and increasing compliance. The US Senate will review a major crypto regulation bill, potentially boosting institutional adoption and market confidence.

Crypto Market

The crypto market saw broad declines over the past 12 hours, with Bitcoin down 4.43% to $97,474 and Ethereum falling 9.27% to $3,144.86, pressured by weak spot demand and ETF outflows. Filecoin dropped 6.88%, PUMP.fun slid 8.03%, while Lighter data was unavailable. Altcoins underperformed, with DeFi and meme sectors leading losses. Notable volatility was driven by risk-off sentiment and recent token unlocks.

Today's Outlook

MARS Protocol (MARS) MRC-164 voting ends today, potentially impacting DeFi governance and liquidity. MINIDOGE (MINIDOGE) launches its DEX 2.0 testnet, which may influence DeFi user activity and protocol adoption. No major token unlocks are scheduled for today.

Fear and Greed Index

54.00% Annual Percentile

31 Fear

Total Crypto Market Cap

$3.00T

1.17%

Total Market Trading Volume

$61.46B

29.57%

Altcoin Season Index

75.00%

Quarterly Percentile

21 / 100

Total Futures Market Open Interest

3.03B

19.64%

Futures

689.17B

2.62%

Perpetuals

II. Industry Updates

Macro-economic Policies

The US Federal Reserve injected $31 billion into the banking system via overnight repo operations on January 1, 2026, marking the largest liquidity support since 2020. This move aims to stabilize short-term funding markets and could enhance risk appetite in crypto markets by increasing overall liquidity.

President Trump has postponed planned tariff hikes on soft home furnishings, cabinets, and bathroom vanities until January 2027, maintaining current 25% tariffs. The delay eases immediate trade tensions, supporting global risk sentiment and potentially reducing volatility in crypto asset prices.

The Federal Reserve's December meeting minutes highlighted concerns over tightening short-term funding markets and increased reliance on repo facilities. The Fed discussed purchasing $220 billion in short-term Treasuries in 2026 to maintain ample reserves, which may support liquidity-sensitive crypto assets.

The US Dollar Index (DXY) fell 9.6% in 2025, its worst annual performance since 2017, driven by three Fed rate cuts and trade policy shifts. The weaker dollar environment typically boosts Bitcoin and altcoin valuations by making USD-denominated crypto assets more attractive globally.

Cryptocurrency Regulatory Trends

Turkmenistan has officially legalized cryptocurrency mining and exchanges as of January 1, 2026, introducing a strict licensing regime for operators. This move opens the market under tight government oversight, potentially attracting investment but limiting unregulated activity.

The UK began enforcing the OECD's Cryptoasset Reporting Framework (CARF) on January 1, 2026, requiring crypto exchanges to report user transaction data to tax authorities. This increases transparency and compliance, reducing anonymity and impacting investor behavior.

As of January 1, 2026, 48 countries, including the UK, have implemented mandatory crypto tax reporting under CARF, ending the anonymity of crypto transactions for tax purposes. This global trend may deter tax evasion and increase regulatory scrutiny.

The US Senate is set to review the Responsible Financial Innovation Act in January 2026, aiming to clarify regulatory responsibilities between the SEC and CFTC. If passed, this could boost institutional adoption and market confidence in the US crypto sector.

The US has enacted stablecoin legislation as the EU completes its first year of MiCA regulation, signaling a shift toward comprehensive digital asset oversight. These frameworks are expected to provide greater clarity and stability for crypto markets in 2026.

Filecoin (FIL): Filecoin price rose 9.7% in 24h, with trading volume at $144.7M. Over 100 teams are testing its Onchain Cloud, driving strong market interest.

PUMP.fun (PUMP): PUMP.fun surged 47.1% in 24h, with $101.6M volume. Aggressive buybacks totaling $225M and bullish pattern formation fuel the rally.

Lighter (LIT): Lighter gained 6.7% in 24h, with $27.5M volume. Recent airdrop and subsequent $250M platform withdrawals indicate high user activity and market rotation.

Smart Money Movements

Metaplanet expanded its Bitcoin holdings by acquiring 4,279 BTC in Q4 2025, bringing its total reserves to 35,102 BTC valued at approximately $3.06 billion.

A whale transferred 973 BTC worth about $85.6 million from Coinbase Institutional to an unknown wallet, highlighting significant on-chain movement.

A total of 20,000 SOL, valued at roughly $2.5 million, was moved from Fireblocks Custody to Coinbase via an intermediary address in a single transaction.

Strategy (MSTR) purchased 10,645 BTC for $980 million during a market downturn, continuing its aggressive Bitcoin accumulation strategy.

A cryptocurrency whale deployed $8 million USDC as margin to open long positions on 11 altcoins via Hyperliquid, with the total value of these positions reaching $13.76 million.

Events to Watch

Jan 2 (Fri)

Mars Protocol (MARS) MRC-164 voting ends; MiniDOGE (MINIDOGE) launches DEX 2.0 testnet, both events may impact DeFi and governance activity.

Jan 5 (Mon)

THETA (THETA) launches TDROP 2.0 governance proposal, potentially influencing protocol direction and tokenholder engagement.

Jan 6 (Tue)

US Nonfarm Payrolls and unemployment rate data to be released, a key macro event for global markets; Hyperliquid unlocks 1.2M tokens and 12.4M HYPE tokens for core contributors, possibly affecting token liquidity and price.

Jan 7 (Wed)

Ethereum (ETH) BPO hard fork scheduled, may impact network operations; Stellar (XLM) launches Protocol X-Ray testnet, advancing blockchain infrastructure; ISM Services PMI data release could influence market sentiment.

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