January 2026 Newsletter

January was a volatile month for the crypto market, with prices declining alongside other risk assets. These moves were largely driven by broader financial market uncertainty rather than events specific to crypto assets.

At the same time, activity by banks, asset managers, and regulators continued to progress. Several institutions took concrete steps in areas such as tokenized financial products, regulated market access, and regulatory coordination. As a result, market prices and longer-term development moved in different directions during the month.

Market performance overview

Prices moved with broader risk markets

Crypto asset prices weakened through much of January as investors reacted to changes in interest-rate expectations and ongoing geopolitical uncertainty. Bitcoin briefly fell to around $77,000, its lowest level in several months, amid heightened volatility on the final day of the month. Ethereum continued to trade well below previous highs and ended the month around $2,400, more than 50% below its August all-time high.

There were no major crypto-specific disruptions during the month. Price movements largely reflected wider risk sentiment rather than changes in the use or availability of crypto asset infrastructure.

Institutions See Bitcoin as Undervalued

Despite recent market volatility, institutional sentiment toward Bitcoin remains constructive. According to the Coinbase Institutional 1Q 2026 report, nearly 70% of institutional investors believe Bitcoin is currently undervalued, signaling confidence in its longer-term fundamentals.

At the same time, positioning data shows resilience rather than retreat, around 62% of institutions report that they have either maintained or increased their crypto exposure since October, even amid market weakness. This suggests that recent price action is being viewed more as an opportunity to accumulate than a reason to de-risk.

Together, these findings highlight a clear theme, institutional investors continue to view Bitcoin as strategically attractive at current levels, with many looking to hold or expand exposure rather than exit the market.

Volatility increased due to leverage

Several of January’s sharp price moves were amplified by leveraged trading. On multiple days, forced liquidations of leveraged positions exceeded $1 billion, contributing to rapid price declines over short periods.

This dynamic remains a defining feature of crypto markets. When prices fall or rise quickly, automatic position closures can intensify moves beyond what underlying buying and selling activity would otherwise justify, which is an important cause of the high volatility the crypto market sometimes can demonstrate.

Key industry developments

Large asset managers reinforced long-term engagement

One of the clearest constructive signals in January came from institutional research published by major asset managers. BlackRock’s 2026 Thematic Outlook highlights crypto assets and tokenization as main themes for the year ahead, positioning them alongside broader developments in capital markets and financial infrastructure.

This framing is significant. When large asset managers discuss crypto assets as part of long-term market structure rather than short-term trading opportunities, it suggests growing institutional confidence in their role within the financial system.

Tokenized real-world assets remain concentrated on Ethereum

Data referenced by large asset managers and industry aggregators shows that tokenized real-world assets remain highly concentrated on a small number of public blockchain networks. Excluding payment stablecoins, which serve a different economic function, Ethereum hosts the clear majority of tokenized assets.

These tokenized assets include instruments such as money market fund shares, stocks, government and corporate debt, private credit, and structured products issued within regulated frameworks.

The concentration on Ethereum reflects institutional preferences for established infrastructure, existing custody and settlement integrations, legal familiarity, and a long operating history. For regulated institutions, these factors often outweigh differences in transaction costs or technical design when selecting blockchains.

U.S. regulatory signals became clearer

In the United States, January did not bring new crypto legislation, but regulatory messaging became more coordinated. Discussion continued around the proposed Digital Asset Market Structure Bill, often referred to as the Clarity Act.

The purpose of this bill is to clarify which crypto assets fall under the supervision of the Securities and Exchange Commission (SEC) and which are overseen by the Commodity Futures Trading Commission (CFTC).

One important issue currently under debate is whether stablecoins should be allowed to pay interest, as this could place them in direct competition with traditional bank deposits. Today, overlapping authority and legal uncertainty have been a significant obstacle for institutions operating in U.S. crypto markets.

During January, senior officials from the SEC and CFTC appeared jointly at public events and spoke about the need for clearer division of responsibilities and more consistent oversight. While the legislation remains under discussion, this shift toward coordination represents a constructive signal for institutions considering longer-term engagement with U.S. crypto asset markets.

In Europe, the Markets in Crypto-Assets Regulation (MiCA) continues its gradual transition from legal framework to practical implementation. Firms across the EU are preparing for licensing and compliance processes expected to conclude later in 2026.

Stablecoins: public-sector issuance reaches the market

January saw a notable development in stablecoin infrastructure, with the U.S. state of Wyoming launching the first state-issued stablecoin, the Frontier Stable Token (FRNT). The token became publicly available in early January under the oversight of the Wyoming Stable Token Commission.

FRNT is designed as a fully backed U.S. dollar stablecoin, with reserves held in cash and U.S. Treasury assets under regulated custody arrangements. Unlike privately issued stablecoins, FRNT is issued by a public authority under state law, with interest earned on reserves directed toward public services rather than private shareholders.

Solana, where FRNT was initially issued, serves as the primary settlement layer for the token. At the same time, Ethereum remains relevant through planned cross-chain interoperability, particularly for integration with tokenized funds, securities, and institutional smart-contract workflows.

Why it matters for investors

Market prices and development do not always move together
January showed that crypto prices can decline even as institutional and public-sector activity continues.

Regulatory filings by Morgan Stanley, asset growth at BlackRock, and the launch of a state-issued stablecoin in Wyoming all took place during a period of weaker market performance.

This divergence highlights the importance of distinguishing short-term price movements from longer-term adoption and infrastructure development.

Tokenization is becoming part of mainstream finance
The launch of a tokenized money market fund and continued development of regulated investment products suggest that tokenization is becoming integrated into established financial processes. These initiatives require sustained legal, operational, and compliance investment, making them more durable across market cycles.

Regulatory clarity supports institutional participation
Clearer regulatory direction, particularly in the United States, alongside MiCA in Europe, reduces uncertainty for institutions. Over time, this may support broader participation and more resilient market structures.