Cryptocurrencies and broad risk assets moved in sync at the beginning of the year, with increased correlation boosting bullish sentiment.

According to the latest analysis from Singapore-based well-known crypto investment firm QCP Capital, the crypto market has recently shown a closer correlation with broad risk assets. Since January, Bitcoin and Ethereum’s breakout movements during Asian early trading hours have been highly synchronized with fluctuations in global stock markets, oil prices, and other asset classes. This strengthening of correlation may indicate a significant shift in market dynamics.

Trigger Points for Broad Asset Correlation: From Geopolitics to Investment Sentiment

After experiencing most of December with volatile consolidation, cryptocurrencies suddenly broke upward. The report notes that in early January, Bitcoin surged past @9.2K@ USD and Ethereum broke through @3100@ USD, coinciding with actions taken by the US regarding Venezuela, which led to stock market strength and weaker oil prices. This simultaneous occurrence across different asset classes suggests that changes in risk sentiment are broadly influencing investment decisions.

Currently, Bitcoin is priced at @88.83K@ USD, representing a pullback from the early January highs. However, QCP Capital points out that this short-term volatility does not alter the overall direction of a structural market shift. As year-end sell-offs subside and new crypto-related legislation is imminent, the foundation for bullish market expectations is gradually solidifying.

Venezuela Bitcoin Reserves Rumors: A New Market Catalyst

In addition to the technical impact of falling oil prices, market rumors are once again circulating that Venezuela may control substantial “shadow” Bitcoin reserves, potentially comparable in size to some large Bitcoin holdings institutions. Although these claims have not been officially confirmed, if true, Venezuela could become the world’s largest sovereign holder of Bitcoin.

More importantly, if the US were to incorporate potentially confiscated Bitcoin into its strategic reserves, it would significantly reduce the likelihood of forced selling, further supporting Bitcoin’s price trajectory. Such broad policy expectation changes are becoming key factors driving market sentiment.

Signals from the Options Market: Short Covering and Gamma-Driven Moves

From the options structure perspective, investor sentiment has clearly shifted to a more bullish stance. The skew of put options across various maturities has decreased, indicating waning demand for downside hedging. Notably, over 3,000 call options with a strike price of @100K@ USD and expiration date of January 30, 2026, have been bought since last week, reflecting strong bullish expectations among investors.

Additionally, demand for bullish moves through straddle options strategies further confirms the recent short covering phenomenon during Bitcoin’s upward rally. If spot prices continue to rise, it could trigger gamma-driven acceleration, but this also entails greater volatility risks.

Cautiously Optimistic: Seizing Opportunities While Managing Risks

While these bullish factors and broad positive expectations are already somewhat reflected in market prices, it is important to note that recent US trading hours often see a retracement of earlier gains. Until this “Asian session rally, US session dip” pattern is broken, investors should remain cautious.

The increased correlation and bullish sentiment at the start of the year undoubtedly provide a foundation for further upside in crypto assets, but the market still requires additional confirmation signals. If the positive correlation with broad global risk assets can be maintained, cryptocurrencies may experience a more stable upward trend.