Key Insights: Counting the Cuts

Majors begin the week with a heavy pullback, following a constructive bounce last week, with BTC up 3.1%, ETH up 5.3%, and SOL lagging, down 6.5%. Risk appetitive initially improved into mid-January, buoyed primarily by the supportive macro data, though liquidations late-Sunday night almost all but wiped this performance out. Interestingly, crypto is behaving more like a macro risk asset with buyers willing to add exposure when the data reduced near-term tail risk. We see derivatives positioning looking constructive, with BTC OI rising slightly, up 0.6% WoW, while ETH OI climbed +3.7%, consistent with traders adding exposure alongside the spot rebound. Funding stayed muted-to-positive across the week, suggesting last weeks move was more spot-led or cautiously levered. The clear read here is that upside expression skewed toward ETH beta this week rather than broad risk.

Institutional flows were standout this week, and it’s a signal we’ve been looking to see in recent market commentary outputs. Digital asset investment products recorded $1b of new inflows, driven primarily by BTC at $891m, while ETH at $97.6m, and SOL at $40.4m were also positive. This is an important reversal after a run of redemptions across late December and into the new year. While this is still relatively fragile until we see sustained inflows, it’s clear that an improved macro backdrop is translating meaningfully into institutional sentiment surrounding digital assets, now we just need the backdrop to sustain.

The sector that managed to hold on to neutral performance this week was privacy, where the sector printed 0.7% on the week, led by DASH’s sharp repricing on a wave of payments and integration headlines, hitting over 100% performance WoW during the week. These include Alchemy Pay support, as well as AEON Pay enabling merchant acceptance at scale. Aside from this, we saw sector dispersion, with most alts in the red, which reinforces that this was a selective week.

Our Take: This was a constructive week that fell at the last hurdle, which looked to our desk to be a cleaner rebound with higher majors, OI rising in a contained manner, and importantly, institutional flows back in the green. The risk remains the extent to which the move is headline-sensitive, which we are beginning to see this morning, and how quickly those headlines will be replaced.

Turning out attention onchain, we saw mixed yields this week across majors, but the stablecoin complex continued to look firmer in aggregate. USDC supply APY rose 6.3% WoW, though remains suppressed, while USDT rose considerably again, up 18.5% WoW. The USDT acceleration was driven by a material supply shock, in which it saw supply fall 17.3% WoW. As has been the case the past few weeks, these moves are liquidity-driven, as opposed to demand-driven.

Chainflows reflected headlines this week, with StarkNet up $480m and Polygon PoS up $474m. Polygon’s boost came as a result of Polygon Labs announcing definitive agreements to acquire Coinme and Sequence, pushing an ‘open money stack’ narrative, centered around regulated on- and off-ramps in conjunction with wallet infrastructure on Polygon rails. StarkNet’s inflows are less exciting, with the STRK unlock on January 15th as the likely driver for the  increased liquidity. Hyperliquid inflows fit the pattern we’ve seen in recent weeks, in which speculative behaviour follows price action.

RWAs saw aggregate AUM up 3.1% WoW, led by Maple, up 9.5%, and Ondo, up 8.9%. Maple’s incentive cycle appears to have pulled forward allocations into its credit rails, with the final Drips claim going live on January the 18th. Ondo benefited from a cluster of product and liquidity catalysts around tokenised equities and RWA financing, most notably Felix’s integration messaging around Ondo Global Markets.

Our Take: The onchain ecosystem is still improving, but it’s improving selectively. Stablecoin rates are doing the heavy lifting, and the liquidity picture shows this week’s strength was about constrained funding. Flows confirm capital is rotating toward execution and volatility venues, while RWAs are compounding on concrete distribution catalysts.

Pump.fun activity reaccelerated meaningfully this past week, with daily active wallets rising to roughly 275,000 at the peak, a level not seen since early 2025, when the platform was at its most active. That earlier period coincided with peak speculative intensity in the memecoin market, as user participation and token launches surged alongside broader risk-on conditions. The recent rebound stands out not just for its magnitude, but for how quickly activity recovered after a prolonged cooling phase.

The pickup was driven by a surge in new wallets, while recurring users remained elevated, suggesting the move was largely driven by a fresh influx of participants. Historically, spikes in new wallet activity on pump.fun have coincided with renewed speculative appetite, as users return to onchain venues that reward speed and risk-taking. After Bitcoin reclaimed $97,000, activity on pump.fun surged and remained elevated relative to Q4 2025, a sign that risk-on behavior could emerge once Bitcoin crosses $100,000.

Pump.fun can be viewed as an early grassroots signal for whether speculative energy is returning to the memecoin segment. While debate continues around the durability of memecoins, they have been a consistent feature of every crypto cycle. In periods where risk appetite turns higher, experimentation typically resumes first at the fringes, with memecoin launches accelerating before broader market participation follows.

Our Take: The rebound in pump.fun activity suggests early signs of risk appetite rebuilding at the edges of the market if Bitcoin is able to cross $100,000. While it is too early to call a full return to risk-on conditions, especially given renewed geopolitical conflict driving the tape, rising participation in memecoin issuance often precedes broader speculative engagement. With ETH open interest on Hyperliquid now exceeding its October highs, even as SOL remains below prior peaks, the setup points to selective re-risking that could broaden if macro and liquidity conditions improve.

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