The first week of 2026 is proving to be a "reality check" for crypto bulls. After a historic run in 2025 that saw Bitcoin reach an all-time high of $126,000, the market is currently navigating a sharp deleveraging phase.
$BTC & $ETH : Testing Critical Support
Bitcoin (BTC): Currently trading between $90,000 and $91,000, Bitcoin has struggled to reclaim the $94,000 resistance level. The primary catalyst for this week's slide was a massive shift in institutional sentiment; after a period of aggressive buying, U.S. Spot Bitcoin ETFs recorded a net outflow of nearly $486 million yesterday alone.
Ethereum (ETH): Ethereum has faced even steeper selling pressure, dropping roughly 4.8% to trade below $3,100. Despite recent news of Morgan Stanley filing for an Ethereum Trust, the asset is suffering from a "sell-the-news" reaction as traders pivot toward higher-performing altcoins like XRP.
The "Long" Squeeze: $447 Million Wiped Out
The most striking data point from the last 24 hours is the $447 million in total liquidations.
The vast majority of these liquidations—roughly $286 million—hit "long" positions (traders betting on price increases). This "long squeeze" happens when falling prices force leveraged traders to sell, which in turn drives prices even lower, creating a domino effect.
Global Impact: Over 129,000 traders were liquidated across the network.
Single Largest Hit: A single ETH-USDT position on Binance was liquidated for over $3.28 million.
Why Is This Happening?
Analysts point to three main factors driving this "January Chill":
Macro Uncertainty: Rising interest rate expectations for 2026 are making "risk-on" assets like crypto less attractive compared to traditional bonds.
ETF Fatigue: The initial euphoria of the 2025 ETF approvals has cooled. Institutions are now trading "tactically"—taking profits after the massive gains of the previous year.
Geopolitical Tension: Ongoing friction in regions like South America (Venezuela) and East Asia has prompted a broader "flight to safety," temporarily draining liquidity from the crypto market.
Perspective: While the numbers look dramatic, some analysts view this as a "healthy reset." By flushing out over-leveraged long positions, the market builds a more stable foundation for the next potential leg up.
