Bitcoin Gains Momentum as Institutional Interest Returns

Bitcoin CRYPTO000BTC

The new year has brought a wave of optimism to Bitcoin markets. Following a period of year-end selling pressure, the digital asset is experiencing a resurgence, fueled by renewed institutional capital flows, active large holders, and the conclusion of tax-related disposals. The key question for analysts is whether this marks the beginning of a sustained upward trend or merely a technical rebound.

The recent rally coincides with the end of a significant headwind: tax-loss harvesting by U.S. investors in December. With that selling pressure now subsided, the market has found room to advance. Concurrently, Bitcoin's price action is increasingly correlating with broader risk assets, while geopolitical tensions, such as recent U.S. military activity in Venezuela, are reinforcing its narrative as a potential hard asset.

Jeff Anderson of STS Digital points to a combination of fresh risk budgets, portfolio reallocations from profitable investments, and flows into tangible assets in light of these geopolitical headlines as drivers behind the move.

Institutional Capital Flows Through ETFs

A primary engine for the current momentum is the U.S. spot Bitcoin ETF market. After significant outflows in the fourth quarter, these products have seen substantial net inflows at the start of 2026. In just the first two trading days of the year, the eleven U.S.-listed ETFs collectively attracted over $1 billion.

Market observers interpret this as a decisive break from the previous "de-risking" phase, where institutional investors withdrew billions from the crypto sector. According to BRN analyst Timothy Misir, this returning capital is providing stability not only for Bitcoin but also for other major cryptocurrencies like Ethereum and XRP. These ETF flows exert a pronounced influence on price discovery, especially during typically thin holiday trading periods.

On-Chain Metrics Signal Whale Activity

Data from the blockchain reveals a notable change in participant behavior. CryptoQuant reports that the average deposit size of Bitcoin on Binance surged to 21.7 BTC per transaction in December 2025—a 34-fold increase from the 0.86 BTC average recorded at the start of 2024. This spike strongly indicates heightened activity from larger wallet addresses.

Wenny Cai, COO of SynFutures, interprets this data as a sign that major holders, or "whales," are becoming more active. This pattern often signals market phases dominated by professional and sophisticated investors rather than the broader retail base.

Glassnode data further shows a revival in network activity, with more active addresses and higher transfer volumes, though transaction fees remain moderate. However, the growth in realized capital remains negative, suggesting that net capital is still leaving the ecosystem structurally. This implies the recent price appreciation is driven more by relative supply scarcity and tactical inflows than by a broad-based, new demand cycle.

Price Action and Technical Perspective

Bitcoin is currently trading near $93,211, representing a gain of over 5% since the beginning of the year. While the price has recovered significantly from its late-November low, it remains approximately a quarter below the all-time high set in October 2025.

From a technical standpoint, conditions have improved. The price now sits above the 50-day moving average, and the Relative Strength Index (RSI) reading of 38.1 indicates a market that is neither overbought nor in acute weakness. Analysts at 10X Research note that the upward trend appears intact as long as Bitcoin holds above key short-term moving averages. For many traders, the zone just below $100,000 is emerging as the next significant psychological and technical resistance level.

Options Market Bets on Six Figures

Renewed optimism is also evident in the derivatives market. Data from Deribit shows growing interest in call options with strike prices between $98,000 and $100,000. 10X Research observes a clear shift in behavior: instead of selling upside calls, traders are increasingly buying them—a pattern that suggests expectations for further price gains.

Jake Ostrovskis, a manager at Wintermute, confirms that call option activity is increasing for major cryptocurrencies. He specifically notes a rise in block trades for January and February calls in the 98k–100k range, indicating the market is pricing in the possibility of a test of the six-figure threshold in the coming weeks.

Liquidity Concerns Linger Beneath the Surface

Despite the positive price movement, underlying market conditions remain fragile. Vikram Subburaj, CEO of Giottus, highlights that spot trading volumes are at multi-year lows and order book depth is comparatively thin.

This liquidity environment means that even moderate inflows or outflows can trigger disproportionately large price swings in either direction. Subburaj acknowledges that the short-term structure has shifted from weakness to strength but cautions against mistaking the current rally for a broadly supported bull run while liquidity remains so constrained.

Q1 Outlook: Volatile but Constructive

The trajectory for the first quarter presents a mixed picture. While prominent voices like Fundstrat co-founder Tom Lee suggest new record highs could be possible by the end of January, a majority of analysts anticipate a volatile consolidation phase. Many view the current movement as a realignment following a strong 2025 rather than the start of an unrestrained rally.

Structurally, Bitcoin's fundamentals remain solid. Approximately 19.97 million of the maximum 21 million BTC are in circulation, the network hash rate stands robust at over 951 EH/s, and with a market capitalization of around $1.87 trillion, Bitcoin continues to command roughly 60% of the total crypto market. The critical factor for Q1 will be whether the recent ETF inflows and heightened whale activity translate into sustained, broad-based demand or merely signify a technical recovery phase.