Coinbase and on-chain analytics firm Glassnode report that digital asset markets entered 2026 with lower leverage, cleaner structure, and more disciplined risk positioning following last year's deleveraging event that materially reshaped derivatives activity and investor behavior.
What Happened: Q1 Market Outlook Released
The two firms published their quarterly Charting Crypto report on Jan. 27, drawing on proprietary on-chain data and an institutional survey to assess market conditions for the first quarter. Bitcoin (BTC) retained structural leadership as its dominance held near 59%, even while mid- and small-cap assets failed to sustain gains from earlier rallies.
Options open interest now exceeds perpetual futures following October's deleveraging. Positions have shifted toward protective structures as participants hedge against further downside rather than exiting risk entirely.
The report noted that BTC supply active within three months increased to 37% in Q4, while long-dormant supply declined modestly.
Also Read: Analyst Says Current 6-Year Crypto Liquidity Cycle Could Be Longest
Why It Matters: Cycle Models Losing Predictive Power
Ethereum (ETH) appears to be approaching the later stages of its current performance cycle, which began from June 2022 lows. The report found that structural changes to Ethereum's ecosystem, including fee compression on Layer 2s and evolving network economics, have diluted the predictive power of traditional cycle frameworks.
Institutional sentiment remains selectively constructive.
Survey responses showed preference for large-cap exposure amid lingering geopolitical uncertainty, with cycle timing increasingly insufficient as a standalone guide for future performance.