The beginning of the year has indeed seen a strong market rally. The shift in the macro environment is deeply rewriting the storylines of the crypto market.

**Why is it so hot right now?**

From a policy perspective, the current US government attitude is clearly friendly, which directly improves overall market expectations. Meanwhile, institutional funds are entering in large volumes—by 2025, US crypto ETFs are expected to attract $32 billion, with Bitcoin ETF net inflows reaching $21.4 billion. There are no signs of short-term outflows; most funds are essentially locked in.

The key is the capital rotation logic. Industry analysts point out that gold and silver will lead the way initially, followed by capital rotating into the emerging crypto sector. This logic is currently playing out. Coupled with the Federal Reserve’s plan to inject $220 billion in liquidity through government bonds, the market bottom has been firmly supported.

**What about altcoins?**

This is the most exciting part. After four years of bear market torment, small-cap coins are finally experiencing a collective breakout. On the first day of the new year, clear bullish signals appeared, with community activity and trading volume surging. Large holders on the Solana chain acted particularly aggressively on New Year’s Day, with continuous accumulation moves and buy pressure reaching historic highs.

Looking at the performance of specific coins, PEPE, AVAX, DOT, FIL, PUMP, and APT all performed well on the first day of the new year.

An interesting detail: Iran recently exchanged crypto assets using ballistic missiles and drones, reflecting the growing role of crypto in non-sovereign payment domains.

**But risks are also present**

Security issues still exist. Although hacker losses decreased by 60% in December, indicating an overall improvement in security, hundreds of small wallets on EVM chains were still hacked, with total losses exceeding $107,000. Most cases involved users clicking on unfamiliar authorization prompts, resulting in frozen assets. Caution is needed.

Another potential risk comes from exchanges. A major Korean exchange holds about $200 million in dormant crypto assets. If this money is activated suddenly, it could impact market liquidity and cause price volatility in the short term. Such large inflows of assets have always been a breeding ground for black swan events.

**To sum up**

The crypto market at the start of 2026 is at a crossroads of bulls and bears. The positive signals are clear: friendly policies, continuous institutional entry, strong altcoin rebound expectations, and a loose liquidity environment. But at the same time, small risks are accumulating—security vulnerabilities, large asset movements, and market overheating leading to potential corrections.

The key is to stay rational when participating—avoid chasing highs, be cautious of unfamiliar authorizations, and keep an eye on large asset movements from exchanges. There are great opportunities in this rally, but greed is often the biggest enemy.