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Bitcoin entered 2026 on firmer footing after a challenging end to last year, rebounding above $93,000 as macro sentiment improved and institutional participation reaccelerated. Following a period of late-2025 consolidation marked by ETF outflows and investor fatigue, early-year price action suggests portfolio rebalancing is underway, with allocators cautiously re-engaging as expectations shift toward a potentially more accommodative policy backdrop later in the year.
ETF Flows Highlight Tactical Volatility
U.S. spot Bitcoin ETFs initially reflected this renewed demand, with year-to-date inflows surpassing $1.5 billion at their peak, including a single-day inflow of $825 million earlier this week. These figures reinforced the view that strategic allocator interest remains intact, even as short-term volatility persists.
However, flows reversed sharply over the past two sessions, with more than $1 billion of outflows. The pullback appears to have been driven by concerns around a potential supply overhang following unsubstantiated reports suggesting Venezuela may hold up to $60 billion in bitcoin. Based on available sources and on-chain analysis, we view this scenario as unlikely. More broadly, stronger-than-expected macro data has modestly reduced the probability of a near-term rate cut, contributing to short-term pressure across risk assets, including bitcoin.
Policy Uncertainty Remains a Key Market Driver
Policy dynamics remain an important variable. There is still no confirmed date for the announcement of the next Federal Reserve chair, though President Trump is expected to name his nominee later this month, potentially around the World Economic Forum in Davos. Kevin Hassett is widely viewed as a leading candidate, though no formal decision has been announced.
Markets are likely to remain sensitive to any signals around the future policy reaction function, particularly given Hassett’s reputation as a policy dove, which could materially influence rate expectations and risk-asset positioning.
Labor Data Revisions Add Noise
Recent U.S. macro data do little to justify urgency for near-term rate cuts. December employment data is unlikely to materially alter the Fed’s stance, especially as wage growth remains elevated and upcoming CPI data is expected to show persistent inflation pressures.
Complicating the picture, upcoming revisions to labor statistics are expected to introduce additional volatility. Changes to the Bureau of Labor Statistics’ birth-death model may result in weaker headline payroll figures in coming months, while population control updates to the household survey could further distort near-term signals. These revisions, effective with the January 2026 employment report, raise the risk that headline labor data softens even if underlying conditions remain relatively stable.
Strategic Outlook Remains Constructive
Despite near-term volatility, we continue to view Bitcoin’s longer-term outlook as favorable. Under our base case, a Bitcoin price near $200,000 by the end of 2026 remains achievable. A bearish outcome in the $70,000–$80,000 range appears less likely and would likely require a combination of adverse shocks, including geopolitical escalation, renewed inflation surprises, policy missteps, or broader financial system stress.
For financial advisors, the current environment reinforces Bitcoin’s dual role in portfolios: a tactically volatile asset in the short term, but a structurally asymmetric allocation over longer horizons when viewed through a macro and liquidity lens.
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