January 2026: Surge in Cryptocurrency Market Liquidity Amid Geopolitical Turmoil

Last week, the international financial markets experienced significant upheaval. From political crises to large-scale fundraising plans by tech companies, and the remarkable growth of the cryptocurrency ecosystem, various trends occurred simultaneously. Notably, the surge in trading volume of physical cryptocurrency ETFs and the expansion of staking assets suggest that institutional investors are rapidly reallocating their liquid assets.

Political Turmoil Sparks Funding Race Among Tech Giants

The U.S. military operation in Venezuela had a major impact on global markets. President Trump announced the arrest of Maduro’s regime, signaling an intention to establish a new government through Vice President Rodriguez. This event went beyond mere political change, increasing international uncertainty, and such geopolitical risks directly influence global capital movements.

Meanwhile, reports emerged that SpaceX, OpenAI, and Antropic are planning IPOs in 2026. According to Financial Times, the expected fundraising for these three companies could reach hundreds of billions of dollars. OpenAI’s valuation is estimated at $750 billion, SpaceX at $800 billion, and Antropic over $300 billion. If all go public, this would inject a historic amount of capital into the market, surpassing the total U.S. IPO volume in 2025.

Physical ETF Trading Volume Breaks $2 Trillion, Evidence of a Market Rich in Liquid Assets

The cumulative trading volume of U.S. physical cryptocurrency ETFs surpassed $2 trillion on January 2. This is particularly noteworthy, as it was achieved in less than 8 months, half the time it took to reach $1 trillion on May 1, 2025. This rapid increase in trading volume strongly indicates that institutional investors are increasingly allocating their liquid assets to crypto assets.

On January 2 alone, a net inflow of $640 million was recorded into Bitcoin and Ethereum ETFs, with BlackRock’s iBIT dominating about 70% of the market share. The range of products is also diversifying, with new assets like SOL and XRP added, and XRP-related products attracting over $1.2 billion since their launch in November last year.

Asset Inflows into Staking and Spot Markets Deepen Liquid Asset Allocation

Staking activity on the blockchain is also accelerating. Bitmain recently added 49,088 ETH (currently worth approximately $152.7 million) to its staking, increasing total staked ETH to 593,152. This means about $1.85 billion of liquid assets are locked in staking.

Individual investors are also active. Iriza, founder of Liquid Capital, holds 626,574 ETH, lowering his average purchase price to $3,105.5 and reaching breakeven. He emphasized, “The key to trend investing is to buy during bullish periods and sell during bearish periods, not to buy at the bottom or sell at the top,” highlighting the importance of timely allocation of liquid assets.

Explosive Growth in Crypto M&A and IPO Markets: New Opportunities for Liquid Asset Management

According to The Block, M&A and IPO activities in the crypto sector surged significantly in 2025. There were 265 M&A deals totaling $8.6 billion and 146 IPOs raising $14.6 billion, both well above 2024 levels. Clarification of regulations and renewed institutional participation are driving this growth.

Of particular note is the rise of alternative acquisition routes such as SPACs and RTOs, indicating that institutional investors are beginning to allocate liquid assets into these emerging transaction structures. These deals are expected to focus on core areas like compliance licenses, payment infrastructure, stablecoins, and enterprise tools.

Rapid Growth of Prediction Markets and the Need for Regulation

Prediction markets within the crypto ecosystem are also expanding rapidly. The total trading volume of prediction markets in 2025 is estimated at $44 billion. However, this growth is shadowed by concerns.

A case was reported where a Polymarket account bet on Maduro’s fall in Venezuela, earning over $400,000 from an investment of just $32,500, raising allegations of insider trading. In response, U.S. Representative Rich Torres plans to introduce legislation banning federal officials from using non-public information for prediction market trading. This exemplifies how the increasing scale of prediction markets’ liquid assets underscores the importance of transparency and fairness.

Market Sentiment Analysis: Caution After Price Rebound

Bitcoin surpassed $90,000, reaching a 3-week high. However, data suggests market sentiment remains cautious. Demand for leveraged long positions on Bitcoin remains stable, and futures-based interest rates are below the neutral threshold. The current annual premium is only 4%.

More notably, the movement of spot ETF liquid assets shows that since December 15, over $900 million has been net outflowed from Bitcoin spot ETFs, indicating institutional investors are cautious about further upside. Meanwhile, Bitcoin put options are trading at a premium, reflecting that professional traders are increasing defensive holdings to hedge against downside risks.

Significance of Reduced Phishing Losses and Ongoing Risks

Scam Sniffer reports that losses from crypto phishing have decreased by 83% in 2025. The losses dropped from approximately $494 million in 2024 to $83.85 million, attributed to improved security awareness and stricter regulations.

However, the report warns that phishing activity has not disappeared entirely. Attackers are shifting strategies to increase frequency while reducing individual damage. Notably, during periods of active on-chain activity, losses tend to rise. In Q3 2025, phishing losses reached $31 million amid Ethereum’s bullish trend, accounting for about 29% of the annual total. Monthly fluctuations ranged from $2.04 million in December, the slowest month, to $12.17 million in August, the most active.

The Dual Nature of Leverage Trading

Cases of high-risk trading strategies by investors are also noteworthy. James Wynn opened a 10x leveraged long position on PEPE, and a whale trader achieved a 100% success rate in PEPE swing trading. However, this trader has accumulated 13,100 PEPE tokens since June 2024 but currently records an unrealized loss of $14.24 million. To break even, PEPE’s price must rise by 281%. This highlights the risks associated with high leverage trading using liquid assets.

Rise of Digital Yuan and Changes in Asset Management

Changes are also occurring in East Asian markets. A trending topic on Baidu titled “Digital Yuan and WeChat Pay/Alipay Differences” topped search rankings. Starting January 1, 2026, digital yuan wallets will accrue interest at demand deposit rates, indicating that digital yuan is evolving from a pure payment tool into a liquid asset management instrument.

Growing Institutional Interest in Ethereum

Ark Invest founder Cathie Wood’s investment in Japanese-listed Ethereum asset manager Quantum Solutions increased its holdings by 187.53 ETH to a total of 5,418.32 ETH, with an average purchase price of $3,943 and a total investment of $20.58 million. Quantum Solutions ranks 15th among listed Ethereum asset managers and also holds 11.6 BTC. This further demonstrates ongoing institutional allocation of liquid assets into crypto assets.

Next Week’s Macro Economic Calendar: A Turning Point for Liquid Asset Positioning

Although the new year has begun, global stability remains fragile. Several key macroeconomic indicators will be released next week, which could significantly influence institutional investors’ liquid asset positioning.

On Monday at 1:30 a.m., Minneapolis Fed President Neil Kashkari will speak at the American Economic Association. On Tuesday at 9 p.m., Richmond Fed President Barkin will deliver a speech. The 2026 CES (Consumer Electronics Show) will be held in Las Vegas from January 6 to 9, dubbed the “Tech Spring Festival.”

On Wednesday at 9:15 p.m., the December U.S. ADP employment change report will be released. On Thursday, the December Challenger job cuts report (8:30 p.m.) and weekly initial unemployment claims (9:30 p.m.) are scheduled.

Most notably, the December non-farm payrolls and unemployment rate, to be announced at 9:30 p.m. on Friday, are the most anticipated data. As the first normal monthly report since the government shutdown, it will directly impact U.S. interest rate policies and global capital’s liquid asset allocation. On Friday at 11 p.m., the University of Michigan Consumer Sentiment Index preliminary reading will be released.