By 2026, the entire cryptocurrency market landscape has changed dramatically. Bitcoin has broken through the $90,000 mark, fluctuating between $90,000 and $91,000, and its total market capitalization has once again surpassed the $3.1 trillion high. Just at the end of last year, it was still hovering at low levels, and now the rebound is quite impressive. Mainstream coins like Ethereum and XRP have also surged, and many smaller tokens have risen along with them.

Why is this happening? There are actually several factors at play.

First and most direct—**buying the dip mentality**. The decline at the end of 2025 was truly frightening, with Bitcoin dropping nearly 30% from its high, and Ethereum falling over 40%. For many, it felt like a fire sale; seeing prices so low, many investors thought "I can't wait any longer" and started buying aggressively. This is a typical psychological effect, compounded by increased trading activity after the holidays, which further boosted buying momentum.

Another historical pattern is called the **January Effect**. Financial markets (including crypto) tend to follow a habitual pattern: in December, investors often sell some assets to offset taxes (tax-loss harvesting), and then in January, they reallocate funds and buy back. The start of 2026 indeed played out this way, especially with increased risk appetite in Asian markets, which then influenced global markets to move together.

The last important factor—**institutional capital reflow**. On January 2nd, the first trading day, US spot Bitcoin and Ethereum ETF products attracted about $670 million in inflows, directly ending the net outflow trend from late last year. This indicates a shift in institutional investors' attitudes—they seem to have new ideas about the market's future.

This wave of gains is the result of multiple forces working together, and there’s some nuance to it in the short term.