The current downturn in cryptocurrency markets is not a bubble-burst correction; what’s scarier is that it fell without a parabolic bubble, which could signal a quicker end. The bottom could arrive as early as February and by April at the latest, underscoring the view that the reset in crypto liquidity may precede a sustained rally. Liquidity is the single most important driver of crypto prices, and inflows could push assets higher as they return.
Ethereum is emerging as the likely catalyst for the next leg higher, with its positioning evolving beyond a simple token into DeFi and on-chain infrastructure. Institutions are beginning to take notice of ETH, echoing the 2017 BTC moment when Wall Street attention intensified. By end-2026, active wallets are expected to reach 1.1 billion, suggesting a broad expansion of on-chain activity that could support a risk-on regime.
Net buyers have been limited, with MicroStrategy and Bitmine each purchasing around $2 billion, while others have remained on the sidelines or sold. If liquidity returns broadly, crypto assets could be among the highest responders, reinforcing the argument that the market’s fate hinges on inflows rather than timing alone. Inflation dynamics and a potential dovish tilt from the Fed could further support risk assets, with core CPI expected to retreat toward 2.5% YoY, a level seen before the pandemic.
Overall, if inflation cools and policy becomes more accommodating, a downside consolidation through April becomes plausible, but liquidity remains the dominant driver. Investors are urged to monitor liquidity shifts rather than chase precise entry points, as the market’s trajectory will depend on how much money flows back into crypto networks.
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