Deng Tong, Golden Finance
Almost overnight, the cryptocurrency market seems to be returning to a bull trend. $Bitcoin (BTC.CC)$ 、 $Ethereum (ETH.CC)$ Bitcoin and Ethereum have surged past $96,000 and $3,300, respectively. Additionally, precious metals, U.S. stocks, and the A-share market continue their previous 'bullish' momentum. What is driving the continuous rise in the investment market? How will the future of the cryptocurrency market unfold?
I. Positive Trends in Precious Metals, Stock Markets, and Cryptocurrency Markets
1. Gold
On January 14, $XAU/USD (XAUUSD.CFD)$ Gold gained over $50 intraday, hitting a new record high of $4,639.11 per ounce with an increase of 1.12%. On January 13, strategists at State Street Investment Management noted in a report that, based on recent price momentum and geopolitical dynamics, the probability of spot gold surpassing $5,000 per ounce this year has now exceeded 30%.
In 2026, gold will be well-positioned, supported by factors such as the surge in global debt burdens, the trajectory of the Federal Reserve's policies, and potential volatility shocks. Strategists believe that the correlation between U.S. stocks and bonds may remain positive in 2026, which increases the allocation space for gold within investment portfolios as investors may seek liquid alternatives. Meanwhile, central bank purchases are expected to sustain physical demand, providing stability to the precious metals market.
2. Silver
On January 14, some trading platforms showed that $XAG/USD (XAGUSD.FX)$ silver breached the $90 per ounce mark for the first time, reaching a new high, with a near 26% increase since the beginning of the year. The market capitalization of silver surpassed $5 trillion, making it the second-largest asset globally. Spot gold ranked first, while NVIDIA came in third.
3. U.S. Stocks
The U.S. stock market closed at a record high on January 12. According to Dow Jones Market Data, the S&P 500 Index and the Dow Jones Industrial Average both rose by 0.2%, closing at record highs of 6977.32 points and 49590.20 points, respectively. The Nasdaq Composite Index, which is dominated by technology stocks, increased by 0.3%, only 0.9% below the closing record set at the end of October last year.
Trump posted on social media: Under my leadership, the US economy is thriving! A manufacturing renaissance and significant growth in household income have driven GDP to achieve levels not seen in decades. We are experiencing a disinflationary economic boom. Driven by unprecedented, and perhaps historically high levels of corporate investment, the private sector growth rate has exceeded 5%, and inflation trends appear quite favorable. All smart money recognizes that the 'hottest' economy globally is the United States.
Andrew Slimmon, Senior Portfolio Manager of U.S. Equities at Morgan Stanley Investment Management, stated that for investors, optimistic expectations regarding further interest rate cuts under the leadership of the Fed Chair appointed by Trump have been a significant theme this year. Many anticipate that a more accommodative monetary policy will support the U.S. economy. Slimmon noted that he believes the rally in the U.S. stock market has been driven by fundamentals, not only throughout last year but also as a healthy component of a continuing bull market until 2026 – even though it may appear to be in its later stages.
4.A-shares
In the first week of trading in 2026, the A-share market continued its upward trend, with the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index rising cumulatively by 3.82%, 4.40%, and 3.89%, respectively.
Fang Lei, Deputy General Manager and Chief Strategy Investment Officer at StarRock Investment, attributed the strong performance of the A-share market since the beginning of 2026 to the accumulation of positive factors, elevated investor sentiment, and heightened sensitivity to favorable developments. Both liquidity factors and policy expectations contributed to the stock market's performance, making this market rally a result of multiple drivers rather than a single factor. Additionally, the sustained appreciation of the renminbi around the turn of the year, with the dollar against offshore renminbi breaking through the key level of 7, also supported the rise in market sentiment.
5. Crypto Market
This morning,$Bitcoin (BTC.CC)$Bitcoin surged past $96,000 earlier today and was trading at $95,020 at the time of writing, representing a 24-hour gain of 3.6%.$Ethereum (ETH.CC)$Ethereum broke above $3,350 and was trading at $3,329.89 at the time of writing, reflecting a 24-hour increase of 6.3%.$Ripple (XRP.CC)$Solana recorded a 24-hour gain of 4.3%.$Solana (SOL.CC)$ 24-hour increase of 3.7%; $Dogecoin (DOGE.CC)$ 24-hour increase of 6.5%.
The latest market analysis from New Fire Research Institute shows that the directional breakout in the cryptocurrency market has arrived as expected. The earlier precise prediction of a 'bottoming-out and consolidation phase' for the market has been fully validated, and the industry is now entering a new phase of accelerated upward momentum. Last week, Bitcoin's 30-dayImplied volatilitydropped to an annual low of 40%, representing the 'calm before the storm,' which was precisely the signal for a potential turning point emphasized by New Fire Research Institute.
With the breakout occurring early this morning, Bitcoin surged past the $96,000 mark, recording a 24-hour increase of 4.4%. Ethereum simultaneously rose above $3,300, posting a 24-hour gain of 7.4%, marking the official end of the market’s consolidation pattern and establishing an accelerated upward trajectory. Ding Yuan believes that the logic behind this rally is robust: The macroeconomic environment remains stable for the next 1-2 months, compounded by multiple significant positive factors such as a16z's $15 billion new fund heavily investing in the crypto sector and South Korea fully lifting its ban on crypto investments. Market liquidity is returning at a faster-than-expected pace. The institute maintains its core view — Bitcoin will soon target the $100,000 mark, and it strongly favors Ethereum experiencing a 'rebound' after being oversold.
II. What is driving the surge in various investment products?
1. Expectations of interest rate cuts
The U.S. Consumer Price Index (CPI) for December increased by 2.7% year-on-year, in line with estimates of 2.7% and unchanged from the previous reading of 2.7%. Following the CPI release, the probability of a Federal Reserve interest rate cut in April rose to 42%, up from 38% before the data was published.
Trump stated: When the market rises, the Federal Reserve should lower interest rates. In the past, interest rates would drop during good economic times. There’s a stubborn person within the Federal Reserve. Every rebound in the economy has been stifled by Chairman Powell, who “will be gone soon.” “The U.S. inflation figures for December have come in very low! This means Jerome ‘Too Late’ Powell should significantly cut interest rates! If he doesn’t, he’ll continue to be ‘too late!’ Additionally, U.S. economic growth figures are also very strong. Thanks to Mr. Tariffs!”
Rick Rieder, Blackrock's Chief Investment Officer of Global Fixed Income and a potential successor to Federal Reserve Chair Powell, is reportedly set to meet with President Trump on Thursday. Amidst this context, Rieder reiterated his support for lowering the U.S. benchmark interest rate to 3%, a level that would mark the lowest in more than three years.
In a CNBC interview broadcast on Monday, Rieder stated that he has repeatedly expressed his desire for interest rates to drop to 3% over the past several months. On Monday, he again voiced his support for this move, which would reduce borrowing costs by at least 50 basis points (0.5 percentage points) from current levels. Following a 25-basis-point rate cut by Federal Reserve officials in December, the current federal funds rate target range stands at 3.5%-3.75%. “I believe the Federal Reserve does have some room for policy maneuvering.”
2. Mid-term Elections
The 2026 U.S. midterm elections are scheduled to be held on November 3, during which all 435 seats in the House of Representatives, 35 seats in the Senate, and some gubernatorial and local official positions will be contested. The midterm elections significantly influence policy expectations, liquidity conditions, and market risk preferences, showing a notable correlation with current favorable investment markets and serving as one of the key driving factors.
At present, Trump's situation is evidently not optimistic.
Trump has urgently requested Republicans to reverse their political decline before the November midterm elections, warning that if Democrats regain control of Congress, he would face impeachment for the third time. “You must win the midterm elections. They will find reasons to impeach me. I will be impeached,” Trump predicted an ‘epic’ Republican victory to overturn previous trends. However, polls indicate dissatisfaction among Americans with his leadership and the economic situation, casting ominous signs for the Republicans’ ability to maintain control of Congress.
Under electoral pressure, the ruling party typically adopts loose policies to secure votes. In 2026, the Trump administration pushed for fiscal stimulus and unexpected interest rate cuts by the Federal Reserve to solidify the Republican majority in Congress, providing liquidity and profit support for assets such as stocks and gold.
On January 8, he was 'instructing my representatives' to purchase $200 billion worth of mortgage bonds, claiming this move would lower interest rates and monthly payments. Two government-backed mortgage institutions — Fannie Mae and Freddie Mac — currently have ample funding. 'Right now, I am paying special attention to the housing market.' This action by Trump represents the latest effort before the November midterm elections to reduce housing costs.
Additionally, media reports indicate that the White House is drafting an executive order aimed at broadly addressing public dissatisfaction with living costs, including promoting measures to allow people to use retirement funds and college savings accounts for down payments on homes.
3. Upcoming 'Crypto Market Structure Act'
For the crypto market, the most significant direct influencing factor in the near term may be the upcoming 'Crypto Market Structure Act'.
On January 13, according to disclosures by crypto reporter Eleanor Terrett, an incomplete draft of the Senate Banking Committee's market structure bill was released. The draft includes the following: two small ethical provisions under the jurisdiction of the Banking Committee — unlike most ethical provisions (which are typically formulated by other committees and will not appear in this draft or the version of the bill to be released within an hour).
Notably, page 72 of the draft addresses content related to felony convictions, while page 270 includes provisions on insider trading. A compromise solution between the DeFi and traditional finance (TradFi) sectors appears to have been reached, reflected in Article 601, which protects software developers. According to industry sources close to the negotiations, the final outcome was finalized this week following last week’s intense closed-door meetings. A key concern among traditional finance practitioners had been that decentralized finance protocols could be used for regulatory arbitrage, with securities industry associations such as the Securities Industry and Financial Markets Association (SIFMA) taking a particularly strong stance on this issue.
The U.S. Senate Agriculture Committee plans to release its cryptocurrency market structure bill on January 21 and hold a critical hearing on the bill text on January 27.
The hearing for this bill is a key step in advancing the legislative process, during which lawmakers will be able to debate amendments, vote on whether to incorporate them into the original bill, and subsequently decide whether to submit the full bill for consideration by the entire Senate.
The U.S. Senate Banking Committee will hold a hearing on its version of the bill this Thursday. A draft of the Banking Committee’s version of the bill was released around midnight on Monday, although it is expected that lawmakers will submit amendments before the hearing. In a statement, Senate Committee Chairman Senator John Boozman said the revised “timeline ensures transparency and allows the committee to conduct a thorough review as it advances legislation, providing clarity and certainty to the cryptocurrency market.”
Galaxy Research issued a warning: The draft of the Cryptocurrency Market Structure Act under review by the Senate Banking Committee would significantly expand the financial surveillance powers of the U.S. Treasury Department. The draft includes provisions allowing transactions to be frozen without a court order, as well as expanded 'special measures' targeting decentralized finance front-ends. Alex Thorn, Director of Research at Galaxy Digital, stated that if these measures become law, they would represent the largest single expansion of financial surveillance powers since the U.S. Patriot Act of 2001.
SEC Chairman Paul Atkins revealed: Last year, the U.S. Congress passed and the President signed the landmark 'The Genius Act,' marking the first time the U.S. government formally recognized crypto-assets through regulation, providing a clear regulatory framework for stablecoins. Congress is actively advancing legislative efforts on cryptocurrency market structures to enhance market certainty, aligning with Trump's goal of making the U.S. the 'global capital of cryptocurrency.' He expressed optimism that the relevant bill will pass and be signed into law this year, believing it will significantly promote the development of the crypto market and strengthen investor protection.
Bitwise Chief Investment Officer Matt Hougan wrote that the CLARITY Act is like the 'Punxsutawney Phil' of this crypto winter. If it merely emerges but fails to pass through Congress, the 'winter' may continue; however, if it successfully passes and becomes law, the crypto market could reach new all-time highs.
III. Crypto Market Price Forecast
Bitwise Chief Information Officer Matt Hougan posted on X platform that if ETF demand persists over the long term, the price of Bitcoin (BTC) will enter a parabolic growth phase. Using the 65% rise in gold prices in 2025 as an example, Matt Hougan pointed out that both gold and BTC prices are determined by supply and demand. After the U.S. confiscated Russia’s treasury deposits in 2022, central banks’ annual purchases of gold increased from about 500 tons to approximately 1,000 tons and have remained stable. This demand shifted the supply-demand balance but did not immediately reflect in prices. Gold prices rose by 2% in 2022, 13% in 2023, and 27% in 2024, until finally exhibiting parabolic growth in 2025.
This is because demand in previous years was met by holders willing to sell gold. When selling pressure is exhausted and demand remains strong, prices surge dramatically. A similar situation currently exists with Bitcoin (BTC) and ETFs. Since the debut of ETFs in January 2024, their purchases have exceeded 100% of the new supply of BTC. However, due to existing holders willing to sell, prices have not yet entered a parabolic phase. If ETF demand continues, the selling pressure from current sellers will eventually be depleted.
Data shows that the 52-week correlation between Bitcoin and gold has dropped to zero for the first time since mid-2022 and may turn negative by the end of January. Historically, in similar scenarios, Bitcoin typically experiences an average increase of 56% within approximately two months, corresponding to a price range of approximately $144,000 to $150,000. Analysts point out that the divergence between Bitcoin and gold often signals a strong upward trend for Bitcoin. The current macro environment is also viewed as bullish, including the recovery of global liquidity (M2 growth) and the nearing conclusion of the Federal Reserve’s quantitative tightening (QT).
Matt Hougan stated, "Historically, Bitcoin bull markets have often coincided with periods of increased global liquidity. With the start of a new global monetary easing cycle and the end of the Federal Reserve's quantitative tightening program, we are likely to see this growth rate continue to rise through 2026, which serves as a positive catalyst for Bitcoin prices."
Year-over-year percentage change in global M2 and Bitcoin. Data source: Fidelity Investments.
In the same macroeconomic environment, gold prices surged by 65% in 2025, while Bitcoin’s gains remained nearly flat. However, according to Hougan's forecast, Bitcoin is expected to outperform gold in 2026.
The long-term fractal chart shared by cryptocurrency analyst Midas also presents a similarly bullish outlook, comparing Bitcoin’s current structure to its 2020-2021 cycle. If historical fractals continue, BTC’s target price for this cycle may approach approximately $150,000.
Bitfinex Alpha published an article stating that, although the mid-term outlook remains positive amid expectations of improved global liquidity by 2026, recent price movements are still constrained by geopolitical uncertainties, fluctuations in ETF capital flows, and the market's need for a decisive breakout above this resistance zone to drive a structural upward trend.Open interestsaw a significant decline at year-end, clearing out legacy positions and providing greater clarity in the derivatives market. This reflects a cautiously optimistic sentiment: long-term bullish positions coexist with near-term bearish hedging, and while implied volatility remains low, it is gradually strengthening.
Yi Lihua, founder of LiquidCapital (formerly LDCapital), wrote on social media: China, the United States, and South Korea are the three most important markets for the cryptocurrency industry, and coincidentally, all three stock markets are currently in bull market phases. Large funds are primarily flowing into equities or even heavy metals (such as gold, silver, and rare earths). Combined with the impact of the interest rate hike cycle and blockchain technology’s real-world influence falling short of expectations, since Bitcoin reached $69,000 in 2021, it has been four years during which BTC has only slightly appreciated, while ETH remains far below its peak from four years ago. These could be considered the 'lost four years' for crypto investors. However, bull markets often emerge during periods of despair, especially against the backdrop of an impending interest rate cut cycle, the globalization of stablecoins, crypto-friendly policies, and the adoption of blockchain-based financial applications. Both from a macroeconomic perspective andTechnical indicatorsan analytical standpoint, we are now at the dawn of a major crypto bull market. As the saying goes, 'be greedy when others are fearful.' Although the bull market may progress more slowly, it will be even more spectacular when it arrives. I also strongly agree with CZ’s view that a supercycle for cryptocurrencies is approaching, led by industry leaders. $Bitmine Immersion Technologies (BMNR.US)$ 、 $Strategy (MSTR.US)$ continuing to accumulate.
Standard Chartered Bank has issued a positive signal regarding the outlook for Ethereum. Geoffrey Kendrick, the bank's global head of digital asset research, stated that despite lowering near-term price forecasts amid an overall sluggish crypto market, he expects Ethereum to outperform other cryptocurrencies by 2026. The report notes that Bitcoin’s continued dominance in the space has weakened the appreciation prospects of digital assets relative to the US dollar due to its underperformance. Standard Chartered forecasts that the ETH/BTC exchange rate will gradually return to the high of approximately 0.08 seen in 2021, driven by Ethereum’s structural advantages over other cryptocurrencies, including its leading position in stablecoins, real-world assets, and decentralized finance, as well as ongoing network scaling efforts. The bank now projects Ethereum to reach $7,500 by the end of 2026, down from a previous forecast of $12,000. Targets for 2027 and 2028 have been revised to $15,000 and $22,000, respectively, both lower than earlier expectations. However, Standard Chartered has raised its long-term outlook, with a forecast of $30,000 by the end of 2029 and a new target of $40,000 by the end of 2030.
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