Bitfinex Alpha #186 | Glimmers of Positivity in the New Year

05 January 2026

Glimmers of Positivity in the New Year

MARKET SIGNALS 2026 Starts On A Positive Note For Crypto

MACRO UPDATE What the Yield Curve and the Dollar Are Telling Markets ISSUE #186

EXECUTIVE SUMMARY After a weak end to the year with late December trading marked by thin liquidity and compressed volatility, Bitcoin entered 2026 showing early signs of stabilisation. BTC consolidated in a tight $85,000$94,000 range, underperforming equities as the S&P 500 closed 2025 near record highs. BTC was likely affected by year-end tax-loss harvesting and portfolio rebalancing, as most traditional asset classes posted strong annual returns while crypto lagged. However, the first trading sessions of 2026 have seen a modest reversal in relative performance, with Bitcoin up over 3 percent while equities have softened, hinting at a potential shift in short-term dynamics.

Encouragingly, the pace of ETF-driven selling has slowed materially into year-end, suggesting that much of the de-risking may already be behind us. With liquidity conditions expected to improve into early 2026, upcoming ETF flow prints will be critical in determining whether this nascent recovery can attract fresh institutional capital or whether caution continues to dominate positioning.

US macro conditions heading into 2026 are being shaped by two reinforcing trends: a steepening yield curve and a structurally weaker dollar. The US Treasury curve has moved decisively out of the inverted state it experienced in 20222024 (see chart below), driven by expectations of eventual policy easing at the front end while long-dated yields remain elevated due to inflation uncertainty, heavy issuance, and fiscal concerns. This configuration reflects a repricing of duration and credibility risk rather than renewed growth optimism, keeping financial conditions tighter than headline rate cuts alone would suggest.

At the same time, the US dollar has weakened meaningfully on a year-to-date basis, reflecting policy preferences for improved trade competitiveness and a gradual reassessment of US policy credibility.

While the dollarʼs structural foundations remain intact, supported by deep capital markets and sustained demand for Treasuries, the balance of risks points to a managed depreciation rather than a reversal. Together, elevated long-end yields and a softer dollar define a macro environment where liquidity improves only selectively, rewarding assets with near-term cash flows, pricing power, and real or defensive characteristics, while constraining broad-based risk expansion.

Corporate and sovereign engagement with digital assets continued to broaden toward year-end. On the corporate side, treasury-led accumulation remained a dominant theme. Strategy Inc. reinforced its long-term Bitcoin approach with another late-December purchase, lifting its holdings to 672,497 BTC and underscoring its use of equity issuance to systematically build a digital reserve rather than pursue tactical exposure. In parallel, BitMine Immersion Technologies deepened its commitment to Ethereum, growing its holdings to roughly 4.11 million ETH while expanding into staking and validator infrastructure, signalling a shift from passive accumulation toward yield-generating, on-chain strategies.

Beyond corporate treasuries, digital assets are increasingly being integrated into shareholder engagement models, while at the sovereign level, crypto adoption is also advancing, albeit cautiously. Turkmenistan introduced a legal framework permitting domestic cryptocurrency mining and trading under central bank oversight, marking a notable policy shift for one of the worldʼs most closed economies. While the law formalises licensing and regulatory supervision, it stops short of recognising cryptocurrencies as legal tender and maintains strict controls on internet access, highlighting a selective approach that seeks economic participation without loosening monetary or political control.

INDEX 1. Market Signals ●

2026 Starts on a Positive Note for Crypto

2. General Macro Update

69 79

1017

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The Yield Curve Returns to Centre Stage

1114

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A Weaker Dollar, Not a Weaker System

1517

3. News From The Cryptosphere

1821

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Corporate Crypto Treasuries Expand as Strategy and BitMine Deepen Bitcoin and Ether Accumulation

1920

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Turkmenistan Establishes Legal Framework for Cryptocurrency Mining and Trading

21

2026 Starts on a Positive Note for Crypto After experiencing pronounced declines in November, with digital assets underperforming equities, both Bitcoin and the S&P 500 entered a period of consolidation throughout December. Trading conditions were characterised by muted volumes and compressed volatility, consistent with typical holiday seasonality. BTC oscillated within an approximate 10 percent range between $85,000 and $94,000, before compressing further into the lower half of that band toward month-end.

Figure 1. BTC/USD Hourly Chart. Source: Bitfinex) Over the same period, the S&P 500 fluctuated within a comparatively narrow 3 percent range and closed the year near its highs, finishing 2025 with a 16.33 percent annual gain. In contrast, Bitcoin ended the year down 6.44 percent, with most large-cap digital assets also closing the year in negative territory.

This divergence reflects a meaningful decoupling of BTC from traditional financial markets. Towards year-end in particular, it faced sustained sell pressure, which we attribute in part to tax-loss harvesting dynamics. Despite a substantial rally earlier in the year, 2025 proved broadly constructive for most major asset classes outside of crypto, incentivising portfolio rebalancing and the realisation of losses.

This divergence, however, began to show early signs of reversal at the start of 2026. Bitcoin has advanced 3.3 percent, while the S&P 500 has faced early weakness during the first trading sessions, a potential signal that relative performance dynamics may be shifting once again.

That said, there are very few firm conclusions to be drawn at such an early stage.

ETF flow data has yet to signal a meaningful return of demand. The 30-day Simple Moving Average of net flows for both Bitcoin and Ethereum ETFs remains in negative territory (see Figure 2 and 3 below), indicating that institutional allocation has not yet turned decisively supportive.

Figure 2. BTC US Spot ETF Net Flows 30Day Moving Average)

Figure 3. ETF Flows Smoothened Data Across BTC and ETH Source: Glassnode)

The intensity of ETF-driven selling has, however, eased materially. By the end of 2025, outflows had slowed to near-neutral levels, suggesting that much of the liquidation and de-risking pressure may already have been absorbed. With Friday, 2 January, closing as a positive session across most major crypto assets, ETF flow data from that session, and from the following week will be particularly important in assessing whether investor appetite begins to recover as the new year unfolds.

As global liquidity conditions are expected to improve into the early part of the year, these upcoming flow prints should provide early confirmation as to whether fresh institutional capital is re-entering the market or whether caution continues to dominate positioning.

The Yield Curve Returns to Centre Stage

Figure 4. US Treasuries Yield curve The US bond market is entering 2026 with the steepest yield curve since 2021, a development that is already shaping the macro narrative across asset classes.

However, early-January price action needs careful interpretation. The first trading days of the year often coincide with thin liquidity, as many institutional participants are slow to return. In such conditions, moves in rates and spreads can appear more dramatic than they would in a fully staffed market. As a result, early signals should be viewed as provisional rather than definitive.

Figure 5. US Treasury Yield Spread Source: Fred Charts)

That caveat aside, the current steepening trend has been developing consistently since December. The spread between two-year and 30-year Treasuries has widened to approximately 140 basis points, while the two-year to 10-year curve has moved out to around 70 basis points. This marks a decisive departure from the inversion regime that prevailed between 2022 and 2024, which was largely driven by aggressive front-end tightening and elevated recession risk. The present curve configuration reflects a different set of forces and carries distinct implications for financial conditions and asset allocation in 2026.

What Todayʼs Steepening Really Signals A yield curve steepens when long-term interest rates rise faster than short-term rates, or when short-term rates fall while long-term rates remain elevated. In todayʼs case, both dynamics are at play. Markets increasingly expect policy rates to ease over time, pulling down yields at the front end. At the same time, longer-dated bonds remain under pressure due to higher term premia, persistent inflation uncertainty, heavy Treasury issuance, and growing fiscal concerns.

Figure 6. Rate Cut Probabilities in 2026  CME FedWatch Tool Investors expect the Federal Reserve to cut rates eventually, but they also demand additional compensation to hold long-term government debt. That compensation reflects worries about inflation staying above target, large budget deficits, and the credibility of long-run fiscal policy. This is why the curve is steepening without signalling an imminent growth boom.

Figure 7. Inflation Expectation in the next 12 months , 10Year US Treasury Yield Source: Macromicro) Absent a major macro shock, the benchmark 10-year Treasury yield is likely to remain range-bound near recent levels, roughly between 44.2 percent. However, with inflation expected to fluctuate between 2.5 and 3 percent in 2026, the risk of a renewed push toward 5 percent at the long end cannot be ruled out. Such an outcome would further strain interest-sensitive sectors, particularly housing, where construction activity remains subdued.

Developments in the bond market have been reflected in money markets, where policy operations have helped maintain orderly overnight funding conditions.

Nonetheless, lower policy rates alone do not imply materially easier financial conditions. Elevated long-term yields continue to raise borrowing costs across the economy, partially offsetting the accommodation associated with front-end easing.

This divergence helps explain why headline rate cuts may not translate into the degree of financial relief observed in previous easing cycles.

Implications for Equities and Hard Assets For equity markets, the message from the curve is nuanced. Higher long-term discount rates limit valuation expansion, particularly for long-duration growth stocks whose earnings lie far in the future. By contrast, companies with near-term cash flows, pricing power, and tangible assets tend to fare better. In short, the curve still supports risk-taking, but it rewards selectivity rather than broad speculation.

Traditionally, rising long-term yields have been a headwind for non-yielding safe-haven assets such as gold and silver. However, that relationship has weakened in recent years. During the aggressive tightening cycle that began in 2022, real yields surged, yet gold prices remained resilient. Geopolitical fragmentation, reserve diversification, and concerns over asset freezes have reshaped how many central banks and sovereign buyers view gold, reducing their sensitivity to yield dynamics alone.

Figure 8. Gold Price vs US 10Year Treasury Yield TradingView)

This context helps explain why todayʼs curve steepening does not automatically undermine hard assets. It reflects fiscal strain and policy credibility risks as much as growth optimism, making the 2-to-30-year spread a more relevant signal than shorter maturities for long-term capital preservation.

As 2026 unfolds, the US yield curve is likely to become one of the most important signals for global markets. It will indicate not only the expected path of policy rates but also the amount of long-term risk that investors are willing to absorb. For equities, the curve will help determine whether front-end easing is sufficient to offset elevated long-term yields. If long-term rates remain high, higher discount rates will continue to pressure valuations, keeping market gains concentrated in sectors with near-term cash flows, pricing power, and tangible assets. A broader equity rally would require not just rate cuts, but a meaningful easing in long-end yields. For safe-haven assets, the curve will clarify whether rising yields reflect confidence in growth or a growing premium for fiscal and policy uncertainty.

A Weaker Dollar, Not a Weaker System The US dollar entered 2025 under sustained downward pressure, declining as much as 11.5 per cent against a broad basket of major currencies before recovering modestly toward year-end. Despite this rebound, the currency remains approximately 9 percent down from January last year, marking one of its weakest annual performances in recent years. While short-term price action has stabilised, the broader forces shaping the dollar point toward a gradual weakening trend rather than a reversal.

Figure 9. The US Dollar Index Source: TradingView) Dollar depreciation has not occurred in a vacuum. US president Donald Trump has openly expressed a preference for a weaker dollar as part of a broader effort to improve trade competitiveness. A softer dollar reduces the relative cost of US exports abroad, supporting manufacturing and helping narrow persistent trade imbalances. From a policy perspective, sustaining export competitiveness has become increasingly central as tariffs, reshoring efforts, and industrial policy take on a more prominent role in economic strategy.

However, currency weakness is not without trade-offs. A weaker dollar raises the cost of imports for US businesses and consumers, reducing purchasing power overseas and adding to inflationary pressures at home. For households, this translates into reduced spending power abroad. For firms, higher import costs feed directly into supply chains. As a result, dollar weakness may support external balances but complicates the inflation outlook, particularly in an environment where price stability remains fragile.

Policy Uncertainty and Confidence Effects Beyond trade dynamics, the dollarʼs decline reflects a broader reassessment of the credibility of US policy. The first half of 2025 was marked by a series of tariff policy decisions that unsettled global investors and trading partners alike. The US also withdrew from multilateral institutions, scaled back development and research funding, and adopted a more confrontational trade stance. These actions contributed to growing uncertainty around the countryʼs long-standing role in the global economic system.

Currency markets are inherently relative. Exchange rates reflect not only domestic conditions but also perceptions of economic stability, institutional reliability, and expected returns across borders. As policy shifts accumulated during 2025, confidence effects became increasingly relevant. While these developments did not trigger abrupt capital flight, they weighed on sentiment and reduced the appeal of dollar-denominated assets at the margin.

That said, the pace of depreciation moderated in the second half of the year.

Markets appeared to adjust to a new baseline of policy disruption, treating further volatility as largely priced in. This sense of inevitability helped slow the dollarʼs decline against major peers, particularly the euro, even as structural concerns remained unresolved.

Structural Strengths Remain Intact The structural foundations supporting the dollarʼs global role remain firmly in place.

The United States continues to offer the deepest and most liquid capital markets in the world, an unparalleled supply of high-quality government debt, and a financial system capable of absorbing global capital flows during periods of stress.

Highly rated sovereign debt remains a critical asset class for global pension funds, insurers, and reserve managers. Similarly, the dollar retains its dominant position in global payments and settlement systems, reinforcing its central role in international finance.

The dollarʼs performance must also be viewed within a global context. While US policy uncertainty has weighed on the currency, developments abroad have played an offsetting role. In Japan, fiscal dominance and accommodative policy have exerted sustained pressure on the yen. Elsewhere, emerging market economies continue to rely on access to US markets and dollar funding, limiting the scope for rapid reorientation away from the dollar system.

In this environment, dollar weakness reflects relative adjustment rather than systemic decline. Investors are reassessing long-term exposure at the margin, not abandoning the dollarʼs central role altogether.

Outlook: A Managed Decline, Not a Collapse Looking ahead, the most likely scenario is a gradual drift toward a weaker dollar over the coming years, absent a major external shock that drives a renewed flight to safety. Structural diversification by investors and central banks may continue incrementally, while policy choices remain a key variable shaping confidence.

At the same time, the dollarʼs entrenched advantages limit the downside. Deep markets, legal protections, and the unmatched scale of US financial assets continue to anchor global demand. The result is not a loss of reserve-currency status but a recalibration of valuation. The outlook points to a weaker dollar without a weaker system. The global role of the greenback remains intact, even as markets adjust to shifting policy priorities, fiscal constraints, and a more contested international economic landscape.

Corporate Crypto Treasuries Expand as Strategy and BitMine Deepen Bitcoin and Ether Accumulation Public companies continue to play an increasingly influential role in digital asset markets, with recent disclosures highlighting renewed large-scale accumulation of both Bitcoin and Ether toward the end of 2025. Together, these moves underscore a growing trend among select corporates to position crypto assets not as tactical exposures, but as core balance sheet reserves aligned with long-term capital strategies.

Strategy Reinforces Long-Term Bitcoin Treasury Approach In a year-end filing with the US Securities and Exchange Commission, Strategy Inc. disclosed the acquisition of an additional 1,229 Bitcoin during the final week of December. The purchase, completed between December 22 and December 28, 2025, amounted to approximately $108.8 million at an average price close to $88,568 per Bitcoin.

The transaction was financed through proceeds from the companyʼs at-the-market equity issuance programme involving Class A common stock.

Following the purchase, Strategyʼs total Bitcoin holdings rose to 672,497 BTC, cementing its position as the largest publicly listed corporate holder of the asset by a wide margin.

At current levels, the companyʼs Bitcoin portfolio reflects an aggregate cost basis of roughly $50.44 billion, with an average acquisition price of approximately $74,997 per BTC. The disclosure reinforces Strategyʼs long-standing approach of using equity issuance to systematically accumulate Bitcoin. Notably, no preferred securities were issued during this period, indicating continued reliance on common equity to fund acquisitions.

The latest purchase concludes a particularly active year for Strategyʼs Bitcoin programme, marked by frequent additions across varying market conditions, and signals the firmʼs intention to retain flexibility through remaining authorised equity capacity should further accumulation opportunities arise.

BitMine Scales Ethereum Exposure and On-Chain Yield Strategy Alongside Bitcoin-focused accumulation, corporate interest in ETH has also intensified. BitMine Immersion Technologies reported a significant expansion of its digital asset balance sheet, with its ETH holdings rising to approximately 4.11 million ETH by last Monday, December 29. This figure represents around 3.41 percent of Etherʼs circulating supply, positioning BitMine as the largest publicly disclosed corporate holder of the asset.

In aggregate, BitMineʼs balance sheet now includes ETH, 192 BTC, a strategic equity stake valued at approximately $23 million, and cash reserves of around $1 billion. Combined, these holdings amount to roughly $13.2 billion, placing the company among the most substantial public corporate crypto treasuries globally.

Chairman Thomas Lee characterised BitMine as a leading source of incremental demand for ETH, citing continued accumulation during periods of year-end selling pressure. According to the company, more than 44,000 ETH were added in the most recent week alone, as seasonal tax-related dynamics weighed on crypto prices and created favourable entry points for long-term buyers.

Beyond accumulation, BitMine has begun deploying part of its ETH holdings into staking activities. Approximately 408,627 ETH has already been staked across multiple providers, with plans to transition further operations to its proprietary Made in America Validator Network, scheduled for launch in early Q1 2026. This initiative aims to enhance yield generation while strengthening the firmʼs infrastructure capabilities within the Ethereum ecosystem.

Turkmenistan Establishes Legal Framework for Cryptocurrency Mining and Trading The Central Asian country of Turkmenistan has formally introduced a legal framework permitting domestic cryptocurrency mining and trading, marking a notable policy development for one of the worldʼs most tightly controlled economies. The new legislation governing digital assets entered into force this week, bringing crypto-related activities under state oversight for the first time.

The law, signed in late November by President Serdar Berdymukhamedov, places cryptocurrency exchanges and mining operations within a licensing regime administered by the countryʼs central bank. Under the new rules, digital asset businesses must obtain official authorisation and comply with regulatory requirements designed to formalise their legal and economic status within the national system.

While the legislation allows both mining and trading activities, it stops short of recognising cryptocurrencies as legal tender. Digital assets cannot be used as a means of payment for goods or services, reinforcing the governmentʼs intention to contain crypto activity within defined investment and industrial boundaries rather than integrate it into the broader monetary system.

The move is notable given Turkmenistanʼs historically restrictive economic and political environment. The Central Asian state maintains a highly centralised economy and ranks among the most closed countries globally. Its economic model has long been anchored in extensive natural gas reserves, which are estimated to be the fourth largest in the world, providing a dominant source of state revenue.

Despite the legalisation of crypto-related activities, broader structural constraints remain in place. Internet access in Turkmenistan continues to be tightly regulated, with significant government control over connectivity and online services. These limitations may restrict the pace at which digital asset markets can develop domestically, particularly for retail participation and cross-border integration.