Bitfinex Alpha #187 | Cautious Optimism Builds, but Headwinds Remain

12 January 2026

CAUTIOUS OPTIMISM BUILDS, BUT HEADWINDS REMAIN

MARKET SIGNALS Bitcoin Continues to Tap at Resistance as Risk Appetite Rebuilds

MACRO UPDATE US Growth Holds Up, but the Drivers Are Changing ISSUE #187

EXECUTIVE SUMMARY Bitcoin continues to test the key $93,500$95,000 resistance zone following its rebound from the late-November low near $80,800.

While the medium-term outlook for 2026 remains constructive amid expectations of improving global liquidity, near-term price action is still capped by geopolitical uncertainty, mixed ETF flows, and the need for a clear acceptance above this resistance band to shift market structure decisively higher.

The sharp year-end reset in options open interest has cleared legacy positioning, leaving a cleaner derivatives landscape that reflects cautious optimism: longer-dated upside positioning alongside near-term downside hedging, and implied volatility remaining compressed but gradually firming.

At the same time, Bitcoin is now advancing into a dense supply zone defined by recent top buyers, whose cost basis spans roughly $92,100 to $117,400. As price revisits this area, breakeven selling pressure is likely to increase, as holders who endured the drawdown look to exit without losses. This creates meaningful overhead resistance and suggests that further upside will require time and sustained spot demand to absorb distribution. Until this supply is worked through, the market is likely to remain range-bound, with risk appetite rebuilding gradually rather than transitioning immediately into a renewed impulsive uptrend.

Recent US macro data point to an economy that is slowing in activity but not yet slipping into outright weakness, with growth increasingly shaped by productivity and trade dynamics rather than labour expansion.

The labour market is showing a clear hiring pause, as job creation has slowed markedly while unemployment remains low, reflecting a “slow hire, no fireˮ environment in which firms retain workers but avoid adding headcount. Rising productivity is allowing businesses to sustain output and margins with fewer hours worked, reinforcing expectations that the Federal Reserve will keep rates unchanged in the near term while remaining cautious about easing later in the year.

At the same time, the US trade deficit has narrowed sharply, driven largely by falling imports rather than broad-based strength in domestic demand, even as exports reached record levels. While the improved trade balance may support headline growth in the short run, the underlying drivers point to softer consumption, risks to transport and logistics employment, and potential pressure on small businesses, suggesting that economic momentum is becoming more uneven beneath the surface.

Across major economies, digital assets are moving decisively toward integration with established financial systems, marking a shift from fragmented crypto markets to institutionally governed infrastructure. In Japan, policymakers have signalled 2026 as a strategic inflection point, with plans to route cryptocurrency trading through regulated exchanges, align major tokens with securities-style oversight, and introduce a flat capital gains tax to support wider retail and institutional participation. This regulatory convergence is echoed in the United States, where a politically connected crypto venture has sought a national trust bank charter to internalise stablecoin issuance and custody under federal supervision, underscoring how stablecoins are increasingly intersecting with core banking functions despite heightened scrutiny. Taken together, these developments reflect a broader global transition toward regulatory clarity, exchange-based access, and institutional frameworks as the foundation for the next phase of digital asset adoption.

INDEX 1. Market Signals ●

Bitcoin Continues to Tap at Resistance as Risk Appetite Rebuilds

2. General Macro Update

69 710

1117

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US Labour Market Shows Hiring Pause as Productivity Reshapes Growth Outlook

1215

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US Trade Deficit Narrows Sharply as Imports Fall and Growth Signals Turn Mixed

1617

3. News From The Cryptosphere

1820

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Japan Signals 2026 as a Structural Inflection Year for Digital Assets

19

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Trump‑Affiliated Crypto Venture Seeks US National Trust Bank Charter

20

Bitcoin Continues to Tap at Resistance as Risk Appetite Rebuilds Since bottoming at $80,822 on 21 November, 2025, Bitcoin has staged several relief rallies, each stalling near a resistance band between $93,500 and $95,000, which has both technical and chronological significance. The broader pullback from the all-time high of $126,110 now stands at around 36 percent, marking the deepest correction of the current cycle.

Looking ahead, we view 2026 as a year in which global liquidity is likely to be a key driver of financial markets, creating a constructive backdrop for digital assets. In the nearer term, however, a decisive break and acceptance above the $93,500$95,000 resistance range is required to unlock sustained bullish momentum and shift market structure higher.

Figure 1. BTC/USD Daily Chart. Source: Bitfinex) For now, price action remains constrained. Geopolitical overhangs including developments related to the USVenezuela relationship and ongoing tariff uncertainty, combined with mixed ETF flow dynamics continue to cap upside progress. As a result, sentiment remains cautiously optimistic, but leaves BTC still trading beneath local range highs and key resistance, leaving the market in a state of consolidation rather than expansion.

The close of 2025 also marked the largest reset in Bitcoin options open interest OI on record. Total OI declined sharply from $52.5 billion on 25 December to $28.6 billion following the 26 December expiry, eliminating more than 45.5 percent of outstanding positioning in a single event.

Figure 2. Total Bitcoin Options Open Interest Across All Exchanges and Strikes. Source: Coinglass) Large concentrations of options OI tend to exert a meaningful influence on short-term price action by embedding dealer hedging flows into the market. Into year-end, positioning had become increasingly concentrated around key strikes, creating periods of structural price pinning as dealers managed long gamma exposure. That regime has now fully unwound. With the late-year positioning rolled off, price action is no longer constrained by those hedging dynamics.

This post-expiry environment offers a materially cleaner signal on market sentiment.

New positions now reflect fresh premium being actively deployed, rather than legacy exposure carried forward from prior months. As a result, positioning in the opening weeks of the year provides a more direct read on how traders are choosing to express risk.

While aggregate OI has not expanded aggressively since the start of the year, it has nonetheless rebuilt to over $33.4 billion. Notably, a large share of this positioning is concentrated in higher strike prices on longer-dated expiries, pointing to a more constructive medium-term outlook among options participants. Historically, this cohort has tended to be more deliberate and forward-looking than perpetual futures traders.

At the same time, near-term expiries show a degree of downside protection through put positioning. We interpret this as a combination of hedging against spot exposure potentially linked to ETF inflows and direct accumulation alongside prudent risk management given the prevailing geopolitical backdrop. Taken together, the options market reflects cautious optimism: structurally reset, selectively hedged in the near term, but increasingly positioned for upside further out along the curve.

Following the sharp reset in open interest after Christmas, implied volatility briefly reached a short-term trough. Reduced participation during the holidays coincided with one-week implied volatility falling to its lowest level since late September, reflecting both thinner liquidity and the absence of near-term catalysts.

Since then, taker activity has begun to return. Early positioning has favoured long volatility exposure, particularly on the upside, as traders reposition into the new year. This renewed demand has gradually lifted the volatility surface across maturities. Even so, implied volatility remains relatively compressed. Expiries from one week to six months are currently clustered in a narrow 42.645.4 percent range, resulting in a notably flat curve.

Figure 3. Implied Volatility Across Multiple Expiries for BTC. Source: Glassnode) Volatility is therefore still trading near the lower bound of its three-month range, with the recent uptick reflecting re-engagement rather than a decisive repricing of risk.

Historically, such “coiledˮ volatility structures have preceded large percentage moves in price, as markets transition from prolonged compression into expansion. In this environment, options markets tend to favour strategies that maintain directional flexibility while remaining broadly neutral to net exposure.

Looking ahead, the resolution of geopolitical uncertainties and upcoming inflation releases will be key determinants of direction. Should inflation data remain in line with expectations and macro headwinds ease, the balance of risks suggests that any volatility expansion is more likely to resolve to the upside for BTC, rather than signalling a renewed period of stress.

Sell-Side Pressure BTC Might Run Into

Figure 4 Bitcoin Entity Adjusted UTXO Realised Price Distribution. Source: Glassnode) As profit-taking pressure has moderated, price has been able to extend higher.

However, this relief rally is now advancing into a structurally distinct supply regime.

BTC has entered a zone dominated by recent top buyers, whose aggregate cost basis is tightly clustered between $92,100 and $117,400. According to the current UTXO Realised Price Distribution (see Figure 4 above), this cohort accumulated heavily near the cycle highs and held through the subsequent drawdown from the all-time high toward the $80,000 region, before participating in the ongoing recovery.

This positioning introduces a growing layer of breakeven sell-side pressure. As price revisits these levels, many of these holders are regaining the opportunity to exit positions without crystallising losses, creating a natural source of overhead supply.

As a result, upside progress is likely to encounter increasing friction within this band.

For a sustained bullish phase to re-emerge, the market will need both time and depth of demand to absorb this distribution. Only once this overhead supply is sufficiently worked through, can price move decisively beyond the recent buyersʼ cost basis and establish a more durable upward trend.

US Labour Market Shows Hiring Pause as Productivity Reshapes Growth Outlook US jobs data showed that new jobs being created slowed sharply in December, reinforcing signs that businesses are holding back on hiring while unemployment levels remained broadly stable. This served to support expectations that the Federal Reserve will keep interest rates unchanged in January, while leaving the door open to rate cuts later in the year.

Figure 5. Unemployment Rate, Nonfarm Payroll Employment Source: Bureau of Labor Statistics) The latest Employment Situation Summary from the Bureau of Labour Statistics shows that non-farm payrolls rose by just 50,000 in December, down from a downwardly revised 56,000 in November. The consensus forecast was for jobs to grow by 60,000. The unemployment rate edged lower to 4.4 percent, signalling that layoffs remain limited despite slower hiring.

Job gains were concentrated in a small number of sectors. Most of the increase came from areas that are less sensitive to economic cycles: ● ● ● ●

Private education and health care added 41,000 jobs.

Leisure and hospitality increased by 47,000 jobs.

Government employment rose by 13,000 jobs.

Financial services added 7,000 jobs.

Outside these industries, hiring declined across much of the economy. Firms beyond education and health care contributed only 9,000 of the 50,000 jobs added in December.

A Stalled Labour Market The data points to a “slow hire, no fireˮ environment. Companies are largely retaining existing staff but remain cautious about adding new roles. Labour mobility has weakened, resulting in fewer workers moving into higher-paying positions. This limits opportunities for wage growth and could keep household confidence subdued.

The median duration of unemployment fell to 11.1 weeks, the number of people working part time for economic reasons increased by around 980,000 compared with one year ago. These figures suggest that while job creation is weak, the labour market is not deteriorating sharply.

Participation among prime-age workers remains high. The labour force participation rate stood at 89.5 percent for men aged 2554 and 78.1 percent for women in the same age group. These levels indicate that most people who want to work are still engaged in the labour market.

Revisions Cloud the Picture Recent data revisions complicate the outlook. A net downward adjustment of 76,000 jobs across October and November now implies an average monthly job loss of 22,333 over the past three months. Further benchmark revisions to both the establishment and household surveys are expected in the coming months. These revisions could significantly reduce reported job gains and alter perceptions of both employment growth and the unemployment rate.

Productivity Is the Key Driver

Figure 6. Labour Productivity for Non-Farm Business (Souce: US Bureau of Labour Statistics)

One major shift underpinning weaker hiring is rising productivity. According to the Bureau of Labor Statisticsʼ Productivity and Cost report, non-farm business sector labour productivity increased 4.9 percent in the third quarter of 2025. Productivity measures how much output the economy can produce for each hour worked. Firms are learning they can produce more with fewer workers due to earlier investments in equipment, software, and automation.

Importantly, recent productivity gains are not just the result of widespread artificial intelligence deployment.

The majority of it also reflects earlier capital investment in automation, data infrastructure, and machine learning-driven systems that predated the current wave of generative and enterprise AI adoption. As productivity improves, companies can protect or expand profit margins without increasing headcount. This makes monthly job gains near 50,000 more likely to become the norm.

Figure 7. Labour Productivity, Output and Hours Worked Source: Bureau of Labor Statistics) Hours worked declined by 0.3 percent overall and by 0.5 percent in manufacturing.

Fewer hours worked can reduce income for lower-income households, raising the risk of weaker consumer spending after the holiday period.

The Federal Reserve is likely to view this softness, combined with stalled hiring, as a reason to remain cautious. Policymakers are expected to keep rates unchanged in January while monitoring incoming data closely.

This makes the March meeting of the Federal Open Market Committee, the next realistic opportunity for rates to fall, but this will depend inter alia on the size of upcoming data revisions. Current expectations, according to the CME FedWatch Tool (see Figure 8 below), point to two 25 basis-point rate cuts this year, with June emerging as a key window for policy easing.

Figure 8. CME FedWatch Tool for Conditional Meeting Probabilities Bottom Line The US labour market remains stable but subdued. Businesses are pausing hiring, as productivity gains enable growth without substantial increases in employment. This shift will be difficult to communicate to the public, but it highlights the need for long-term skill development and adaptation as technology continues to reshape how the economy grows.

US Trade Deficit Narrows Sharply as Imports Fall and Growth Signals Turn Mixed The US trade deficit narrowed to its lowest level since June 2009. Data from October, delayed due to last yearʼs federal government shutdown, showed a sharp fall in imports and a rise in exports. While this shift could support economic growth in the short term, the underlying drivers point to weaker domestic demand and rising risks for employment and small businesses.

Figure 9. Goods and Services Trade Deficit Source: US Bureau of Economic Analysis) Data from the Bureau of Economic Analysis and the Census Bureau shows that the trade gap narrowed by 39 percent to $29.4 billion. The consensus forecast was for the deficit to widen to $58.9 billion.

Imports Drive The Improvement The sharp improvement in the trade balance was largely due to falling imports. Total imports declined by 3.2 percent to $331.4 billion. Goods imports fell by 4.5 percent to $255 billion, the weakest level since June 2023.

This decline likely reflects the impact of higher tariffs introduced under President Donald Trump, as well as softer domestic demand. When households and businesses reduce spending, fewer goods are imported, which mechanically narrows the trade deficit.

Imports of industrial supplies dropped by $2.7 billion, reaching the lowest level since February 2021. Most of this decline came from a $1.4 billion reduction in non-monetary gold imports, which are excluded from gross domestic product GDP) calculations.

Exports Hit Record Levels Exports increased by 2.6 percent to a record $302.0 billion in October. Goods exports rose by 3.8 percent to an all-time high of $195.9 billion, supported by strong shipments of non-monetary gold and other precious metals.

However, not all export categories showed strength. Exports of consumer goods, largely pharmaceutical products, declined, as did exports of other goods. This suggests that while headline export figures look strong, underlying demand across key sectors remains uneven.

The goods trade deficit narrowed by 24.5 percent to $59.1 billion, the lowest level since March 2016. Exports and imports of services both reached record highs, reflecting continued strength in areas such as travel, financial services, and intellectual property.

Trade Policy And Growth Implications Trade flows have been volatile amid ongoing protectionist trade policies. Despite this, trade made a positive contribution to GDP growth in both the second and third quarters of 2025.

The Federal Reserve Bank of Atlanta currently estimates that GDP will grow at a 5.1 percent annualised rate in the fourth quarter. This follows strong growth of 4.3 percent in the July-September period.

While a narrower trade deficit can support GDP growth, the drivers behind this improvement matter. A decline in imports driven by weaker demand can create collateral damage across the economy. Lower import volumes reduce activity in transportation and material-moving jobs, directly affecting employment in logistics and shipping.

Small businesses are also at risk. Reduced imports of intermediate and final goods can disrupt supply chains and limit sales, which may weigh on household income and consumer spending. If these trends persist, the trade balance may improve on paper while broader economic momentum softens, increasing downside risks to growth in the months ahead.

Japan Signals 2026 as a Structural Inflection Year for Digital Assets Japanʼs Finance Minister Satsuki Katayama has signalled strong government support for integrating cryptocurrencies into its regulated financial system in 2026, positioning the year as a strategic pivot toward digital assets. At the Tokyo Stock Exchangeʼs New Year opening ceremony last Monday, January 5, she declared 2026 Japanʼs “digital yearˮ and emphasised that digital assets should be traded through established stock and commodity exchanges, not siloed on standalone crypto platforms, to enhance investor protection and oversight. This stance reflects a broader policy push to treat major digital assets under traditional financial market frameworks, including potential pathways toward regulated exchange-traded products and closer alignment with securities laws.

Policy efforts accompanying this direction include reclassifying certain cryptocurrencies as financial products, moving them under rules similar to stocks and bonds, and tax reforms that would introduce a flat 20 percent capital gains tax on crypto profits, a significant reduction from prior rates, further aligning crypto with mainstream assets. These reforms aim to expand public access, strengthen oversight, and attract both retail and institutional participation in digital markets.

Overall, Japan is actively recalibrating its regulatory and market architecture to integrate digital assets within its established financial ecosystem in 2026, supporting exchange-based trading, clearer classifications, and investor-friendly tax treatment as part of its fiscal vision for technological and financial modernisation.

Trump‑Affiliated Crypto Venture Seeks US National Trust Bank Charter World Liberty Financial, the cryptocurrency venture linked to US President Donald Trump, has taken a significant step toward integrating digital assets with the traditional banking system by applying for a national trust bank charter from the US Office of the Comptroller of the Currency OCC. The application was submitted through a subsidiary, WLTC Holdings LLC, which plans to establish World Liberty Trust Company, a federally regulated trust bank designed primarily to support the issuance, custody, redemption, and conversion services for its USD1 stablecoin, a dollar‑backed digital asset that has grown rapidly since its launch and reportedly reached multibillion‑dollar circulation in its first year. If approved, the trust bank would allow the venture to internalise stablecoin operations under one regulated entity and serve institutional clients such as exchanges, market makers, and investment firms, potentially offering fee‑free minting and conversion between USD and USD1.

The move reflects a broader trend in which digital‑asset companies are pursuing federally chartered trust banks as a way to bridge crypto products with regulated financial infrastructure, following a series of conditional approvals for similar charters granted to other firms late last year. The application also aligns with recent legislative developments, including the GENIUS Act, which establishes a federal framework for stablecoin regulation and oversight. Supporters argue that a national trust charter would provide clear regulatory standards, stronger consumer protections, and expanded institutional participation in stablecoin and digital asset services by bringing key functions under a single supervisory regime.

However, the proposal has attracted political scrutiny and conflict‑of‑interest concerns, given the Presidentʼs association with the venture and the fact that the OCCʼs leadership serves at the pleasure of the White House. Critics, including prominent lawmakers, have questioned whether the administrationʼs dual role as regulator and stakeholder presents ethical challenges, while supporters emphasize that the entity would operate under the same statutory standards and supervisory framework as other charter applicants.

Overall, the bank charter application underscores an ongoing shift in the US regulatory landscape toward formalising digital assets within federally supervised financial institutions, illustrating how stablecoins and crypto products are increasingly intersecting with traditional banking structures.