This week in crypto, markets grappled with a growing disconnect between digital assets and traditional markets, as Bitcoin and broader crypto prices continued to lag behind strong performances in gold and equities. Rather than sparking panic, the divergence has sharpened focus on what comes next, with investors increasingly looking beyond short-term weakness toward the potential impact of shifting monetary policy, liquidity conditions and political risk as 2026 approaches.

One of the most discussed themes this week was the idea that crypto has lagged other risk and safe haven assets, but could regain momentum in 2026. Analysts pointed to the strong performance of gold and equities during periods of economic uncertainty, contrasting this with crypto’s relatively muted returns. However, this underperformance is not necessarily being viewed as structural weakness. Instead, many market participants see it as a setup for renewed interest if macro conditions turn more supportive. A key factor is the outlook for US monetary policy. If the Federal Reserve begins cutting interest rates in 2026, lower borrowing costs and improved liquidity could draw retail investors back into risk assets, including cryptocurrencies. At the same time, analysts cautioned that increased money supply and liquidity injections often support higher asset prices, but political uncertainty tied to the 2026 US midterm elections could introduce fresh volatility and disrupt otherwise favourable conditions.

Institutional activity provided a more mixed picture this week. Spot Bitcoin exchange traded funds recorded significant outflows over the Christmas period, with investors pulling back amid holiday trading and broader market caution. These outflows highlighted how sensitive ETF flows remain to short-term sentiment and macro uncertainty. Despite this, long-term conviction among large holders appears intact. Strategy, formerly known as MicroStrategy, capped off the year with aggressive Bitcoin accumulation, purchasing more than 22,000 BTC in December alone. The move reinforced the company’s long-standing thesis that Bitcoin remains a strategic treasury asset, regardless of short-term price fluctuations. Tether also added to this trend, closing out 2025 with the purchase of 8,888 BTC, lifting its disclosed Bitcoin holdings to more than 96,000 BTC. Together, these purchases underline the growing divide between short-term trading behaviour and long-term institutional accumulation.

Regulation was another major focus as new global crypto tax reporting rules officially came into effect on January 1, 2026. Under the OECD’s Cryptoasset Reporting Framework, crypto asset service providers across the UK and more than 40 other countries are now required to collect and share detailed user and transaction data with tax authorities. The framework is designed to close loopholes that allow crypto assets to be used for tax evasion by standardising reporting across jurisdictions. While the changes may increase compliance costs for exchanges and custodians, they are also seen as a step toward greater legitimacy and transparency for the industry, particularly in major financial markets.

In the Web3 and decentralised applications space, security concerns took centre stage following an exploit on the Flow blockchain. The Layer 1 network, best known for powering projects like NBA Top Shot and CryptoKitties, suffered an exploit worth roughly US$4 million, sending the FLOW token down around 40 percent at its lowest point. The network was temporarily taken offline before being restored, and the Flow Foundation has since outlined a recovery and remediation plan. The team also raised concerns about large token movements on a centralised exchange during the incident, drawing renewed attention to the risks that remain within both decentralised infrastructure and its interaction with centralised platforms. While the incident was relatively contained compared to larger exploits seen in recent years, it served as a reminder that security remains one of the biggest challenges facing Web3 ecosystems.

As the week comes to a close, the crypto market appears caught between caution and anticipation. Short-term pressures, from ETF outflows to regulatory adjustments, continue to weigh on sentiment. However, sustained institutional accumulation, clearer global rules and the potential for more supportive macro conditions in 2026 are keeping longer-term optimism alive. How these forces interact over the coming months will likely determine whether crypto can reclaim momentum and close the gap with other major asset classes.

More news stories circulating the block: 

• Bitcoin breaks tradition, ends post-halving year negative

• Bitwise filed with the SEC for 11 new crypto ETFs

• Trust Wallet browser extension goes offline

• Santiment data reports whales accumulating SOL-related tokens