Binance Report: Expectation of Accelerated Fed Rate Cuts in 2026 Benefits Bitcoin, January May Mark Turning Point for Bearish Trend

According to Binance Research, despite loose monetary policy by the Fed, the crypto market continues to decline due to cautious investor sentiment. However, with asset management companies increasing holdings, Bitcoin and Ethereum's market dominance is growing. January may be a turning point for the bearish trend as investors consider reallocating to cryptocurrencies from overvalued asset classes. In 2025, metals outperformed as an asset class due to loose monetary policy, AI demand, and a shift towards 'commodity control.' Although Bitcoin also benefited from similar macroeconomic factors, its performance in the fourth quarter was mixed due to a lack of 'strategic asset premium.' However, this differentiation may be temporary as US legislation pushes to institutionalize strategic Bitcoin reserves and potentially shift from holding seized assets to active fiscal purchases, aligning Bitcoin's valuation framework with strategic metals. Market participants expect loose policy to accelerate in 2026 due to tariff impacts, weak labor market, and leadership shift towards dovishness, requiring higher long-term premiums to compensate for 'fiscal dominance' and upcoming debt pressures exceeding $50 trillion. The steepening yield curve indicates the market does not endorse the Fed's 'soft landing' narrative, creating an excellent opportunity for Bitcoin to benefit from both short-term cheap liquidity inflows and long-term erosion of fiat credit. Since their launch, most altcoin ETFs have attracted net inflows, with total inflows exceeding $20 billion, led by XRP and SOL, while other assets also contributed smaller but steady inflows. In contrast, Bitcoin and Ethereum spot ETFs have seen continuous net outflows since October, highlighting differentiation in marginal demand as market momentum slows. Although still in the early stages, more altcoin ETF approvals and ongoing inflows may increasingly impact liquidity distribution, especially if broader market inflows accelerate again. In 2025, six newly launched stablecoins surpassed $1 billion in market value. As stablecoins continue to be applied globally, their related metrics are becoming increasingly important indicators of global financial activity.

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