Crypto Markets Return to Investor Confidence as Risk Assets Rise

Cryptocurrency prices respond to changes in global market sentiment, with Bitcoin and Ethereum rising after long days of fear. As geopolitical tensions gradually ease, investor confidence is rebounding, fueling fresh momentum in crypto assets and other risk categories.

Last week, tariff threats from the US administration caused volatility in global markets. But when Trump withdrew some threats against NATO allies regarding Greenland, sentiment dramatically shifted. This tone change triggered a coordinated rally in stocks, commodities, and digital assets—a classic “risk-on” environment where investors are once again willing to take more aggressive positions.

Bitcoin and Ethereum Price: The Panic Selling Retreat

Bitcoin reached $88,270 on January 22, with a 0.75% gain, successfully staying above the $88,000 support level. Currently, the asset is trading at $88.27K, still struggling to reach the $90,000 barrier seen last week.

Ethereum showed stronger performance, rising 1.25% and surpassing the $3,000 mark. However, latest data shows ETH pulling back to $2.96K with a 24-hour decline of -1.87%, indicating some profit-taking at higher levels.

The broader CoinDesk 20 index increased by 1.56% over the past 24 hours, reflecting strong performance of major altcoins. The risk appetite recovery has provided traders with psychological relief after weeks of constant panic and liquidations.

Geopolitical Backdrop: Why Bond Yields and Tariff Threats Matter

One of the main drivers of the recovery is the dramatic drop in long-dated government bond yields in Japan. After reaching multi-decade highs, yields on 10-year and 30-year Japanese government bonds fell in two consecutive sessions, supported by reassuring statements from Tokyo officials.

When bond yields fall, asset prices rise because fixed-income investments become less attractive. This creates a spillover effect into global credit markets and, by extension, into cryptocurrency—often influenced by risk sentiment and liquidity conditions.

Trump administration’s tariff rhetoric was a major market catalyst. At the World Economic Forum in Davos, the US president threatened new tariffs against NATO allies regarding Greenland’s status. But in a characteristic display of trade negotiation theatrics, the stance was quickly reversed, with an announcement of a “framework for a future agreement” easing immediate market concerns.

The reaction was swift and decisive. Global equities rose, gold prices fell, and risk sentiment dramatically improved—benefiting the cryptocurrency sector, which thrives in high-conviction market environments.

Technical Outlook: Bullish Divergence and Altcoin Relative Strength

Technical analysis reveals interesting patterns in Bitcoin’s relationship with leading altcoins. The Bitcoin market cap ratio versus the top 10 altcoins has held major weekly support levels despite recent market weakness.

More significantly, bullish RSI divergence is emerging in the lower panel of the chart—where the momentum indicator gradually rises while the price ratio remains flat or downward. This divergence typically signals potential reversal energy and suggests that the 10 leading altcoins may outperform Bitcoin in the short to medium-term timeframe.

Jasper De Maere, desk strategist at Wintermute, warns that Bitcoin’s failure to hold in the “high 80s” range could establish lower highs, indicating structural weakness. A breakdown below $87,000–$88,000 should be monitored as a risk event for the broader crypto market.

Mining Stocks and Crypto Equities: Reflecting Strength in Digital Asset Recovery

Mining-focused and crypto-native companies showed mixed performance in the recent trading session. Coinbase Global closed at $226.93 (–0.35%) on January 22 but recovered to $229.18 in pre-market on January 23, with a +0.99% gain. Galaxy Digital gained positive momentum, rising 1.09% to $32.45 and extending further to $33.19 pre-market.

Mining operators displayed volatility. MARA Holdings rose 1.83% to $10.56, Riot Platforms fell 4.70% to $17.25 but partially recovered with +1.97% pre-market, and CORE Scientific declined 0.87% to $18.20.

CleanSpark and CoinShares Bitcoin Mining ETF benefited from broader crypto strength, rising 0.39% and falling 0.62%, respectively, reflecting ongoing volatility in mining profitability narratives.

Institutional Money Flows: ETF Dynamics and Capital Trends

Bitcoin spot ETFs experienced negative daily net flows of -$708.7 million, indicating some profit-taking at higher prices. However, cumulative net flows remain positive at $56.61 billion, showing solid long-term institutional demand.

Total Bitcoin holdings in spot ETFs have reached approximately 1.3 million BTC—a significant portion of the total Bitcoin supply and a clear testament to institutional adoption trajectory.

Ethereum spot ETFs also showed outflows of -$287 million daily, with cumulative inflows reaching $12.41 billion. Total ETH holdings now stand at 6.14 million coins, reflecting growing institutional participation in the second-largest cryptocurrency.

Outflow patterns are normal in volatile markets and not necessarily bearish, as they may reflect portfolio rebalancing rather than sentiment collapse.

Pudgy Penguins: A Beacon of NFT Market Revival

Across different segments of the crypto landscape, Pudgy Penguins has emerged as one of the strongest NFT-native brands of the current cycle. The project successfully shifted from a speculative “digital luxury goods” positioning to a comprehensive multi-vertical consumer IP platform.

The acquisition strategy is clever—targeting mainstream audiences first through physical toys, retail partnerships, and viral media campaigns, then onboarding users into Web3 via gaming experiences, NFT collectibles, and the PENGU utility token. The integrated ecosystem includes phygital products with over $13M in retail sales and more than 1 million units sold globally, gaming experiences like Pudgy Party with over 500K downloads in just two weeks, and widely distributed tokens airdropped to over 6 million wallets.

While the market currently prices Pudgy at a premium relative to traditional IP peers, long-term success will depend on flawless execution across retail expansion, mainstream gaming adoption, and deepening on-chain token utility use cases.

Key Events and Indicators to Watch

In upcoming sessions, market participants should monitor several critical catalysts:

Macroeconomic Data: US Q3 GDP growth estimates are at 4.3%, unemployment claims expected at 198K, and PCE inflation data are crucial for Federal Reserve policy expectations. Lower-than-expected inflation readings could support risk assets.

Crypto Protocol Developments: The Stellar X-Ray Protocol mainnet launch marks a technical milestone. NEAR Protocol’s inaugural Intents Day event signals ongoing innovation in layer-one blockchain space.

Token Unlocks and New Listings: The MBG token unlock will release 12.13% of circulating supply worth $10.11 million, potentially creating selling pressure. Monitoring Immunefi and Fight Foundation token generation events is important for liquidity and price discovery.

Bond Yield Trajectory: Continued decline in bond yields remains supportive for crypto valuations. Reversal toward higher yields is a potential risk factor to watch.

Risks and Sustainability of the Rally

While recent price recovery is positive for market sentiment, sustainability is not guaranteed. Trump administration’s tariff policy remains a major wildcard—each tweet or policy announcement could trigger significant volatility.

A technical breakdown below $87,000 in Bitcoin would establish a lower highs pattern, indicating waning momentum. Altcoin outperformance indicators are bullish, but divergence must be confirmed by actual price action before declaring a sustainable altseason.

The key to forward-looking sentiment is geopolitical stability and continued predictability of central bank policies. Even large positive surprises can be quickly negated by unexpected policy shocks or escalating trade tensions.

For investors, a balanced approach combining technical discipline, fundamental analysis, and macroeconomic awareness is critical for success in the volatile crypto environment of 2026.