Coinbase analysts are optimistic about a crypto market recovery in early 2026. In the company’s weekly update, the analysts stated that the December sell-off was over, resetting the market for a likely rebound in the first quarter.
Systemic leverage also fell to 3% of the total crypto market capitalization, down from frothy levels of 10% in 2025, the analysts said. noted. This marked a healthy reset after flushing excess debt, conditions that could drive a sustainable recovery.
Source: Coinbase/X
Moreover, Coinbase emphasized that renewed Bitcoin[BTC] And Ethereum[BTC] ETF inflows, along with options data, indicated a “growing appetite for upside exposure.”
“As liquidity returns after the holidays, early flows indicate institutions are cautiously resuming risk-taking.”
Will 2020’s liquidity style fuel a crypto rally?
A similarly positive outlook was also shared by analytics firm Glassnode, which cited an 82% drop in selling pressure.
The level of daily average profit taking rose above $1 billion at the end of 2025, but that is still the case relaxed to $183 million by early 2026. According to the analytics firm, this was a positive trigger for a recovery.
The liquidity and macro landscape were also excellent for recovery.
According to analyst James Easton, the Fed’s balance sheet (which tracks liquidity levels) has turned green for the first time since 2023.
Source: James Easton/BM Pro
This meant improved liquidity, a trend that drove the explosive BTC rally in 2020.
Furthermore, President Donald Trump’s recent plan to purchase $200 billion in mortgage bonds is seen as a net liquidity injection and positive for BTC.
JPMorgan too, by the way shared optimistic outlook for liquidity and markets for 2026.
Source:
For his part, he is the founder of BitMEX Arthur Hayes predicted that this was one of the key catalysts that could push BTC to $1 million per coin.
Bitfinex longs suggest…
Another one dataset supporting the bullish case for BTC were the Bitfinex longs, or whale positioning.
In the past, Bitfinex exchange whales would increase long exposure during market downturns and decrease or disappear during rallies. The trend is perfectly correlated with previous BTC price action, and the last time Bitfinex eased bids, the BTC price rose 35%.
Source: Crypto Tice/X
A broader launch of BTC could also boost the altcoin market, which has already seen a significant recovery in early January. Meanwhile, BTC was trading at $91,000 at the time of writing, ahead of next week’s inflation data and the rise in crypto accounts.
Final thoughts
- The liquidity landscape and crypto market reset indicated a likely recovery in early 2026
- It is unclear whether next week’s inflation data and crypto bill outcomes will impact recovery chances.