Bitcoin, Ethereum, XRP Surge in Early 2026 Amid ETF Flows and Geopolitical Moves

Bitcoin and Ethereum began 2026 with strong price gains, with Bitcoin reclaiming $90,000 and Ethereum surging above $3,100. XRP also saw significant momentum, flipping BNB to become the fourth-largest cryptocurrency by market cap. The global crypto market cap surpassed $3 trillion, signaling a shift in investor sentiment.

The surge was driven by renewed institutional interest and inflows into U.S. spot ETFs. On January 2, U.S. Bitcoin ETFs saw $471 million in inflows, with BlackRock’s iShares Bitcoin Trust leading the way. This marked the second-highest daily inflow since November 2025.

XRP ETFs also attracted $13.59 million in inflows, while Ethereum ETFs recorded $174 million in inflows on the first trading day of the year. The inflows signaled a potential reversal in market trends after a period of tax-loss selling and withdrawals in late 2025.

Why Did This Happen?

The rally followed a period of tax-related selling and year-end book cleanups in late 2025, which capped upside potential. With tax loss harvesting pressure easing, investors began to rotate back into risk assets. QCP Capital noted that the fading tax pressure allowed for a price bounce. The alignment of crypto with broader risk assets is now more evident, suggesting a regime shift in investor behavior.

Geopolitical developments also played a role. News of the U.S. military action in Venezuela created a risk-on environment, with traders assessing broader economic and geopolitical implications. The potential for a Venezuelan shadow Bitcoin reserve further fueled market optimism.

How Did Markets Respond?

The market responded with increased participation and renewed confidence. The U.S. stock market also saw gains, with the S&P 500 and Nasdaq-100 rising. Bitcoin’s price action was supported by ETF inflows, particularly from institutions. BlackRock’s Bitcoin ETF led with $371.9 million in inflows on January 5, while Fidelity’s FBTC added $191.2 million.

Ethereum ETFs also saw strong inflows, with Ethereum funds reporting $174 million in inflows. The Grayscale Ethereum Trust led with $53.69 million, followed by BlackRock’s iShares Ethereum Trust with $47 million.

What Are Analysts Watching Next?

Analysts are monitoring the sustainability of the rally and the potential for further institutional demand. Tom Lee of Wall Street noted that Bitcoin’s parabolic rise in 2025 indicated bullish sentiment in 2026. The U.S. dollar losing its position as the dominant global reserve to gold also signaled a shift in monetary dynamics.

Market structure indicators are also under scrutiny. Bitcoin is stabilizing within the $80,000–$95,000 range as momentum recovers. Open interest is rebuilding cautiously, and options markets indicate short-term volatility. The market is now watching whether Bitcoin can break $100,000 or if the move is a temporary peak.

Institutional players are also being watched for their next moves. Morgan Stanley filed with the SEC to launch a Bitcoin ETF, following the lead of BlackRock and Fidelity. This expansion of institutional participation could further solidify demand for Bitcoin and Ethereum.

Investors are also watching for policy developments. The U.S. Senate is in negotiations to finalize a crypto bill, with potential implications for regulations on stablecoin interest payments and DeFi operations. The finalization of the bill could affect investor sentiment and regulatory clarity.