From Reset to Re-Acceleration: Why the Data Still Favors Expansion
As the calendar turns to a new year, markets are already offering a meaningful amount of information beneath the surface. While headlines remain noisy and narratives conflicted, positioning, breadth, leverage behavior, and macro-leading indicators continue to tell a more consistent story. This issue walks through those signals in sequence, beginning with early-year risk appetite, moving through equity participation and structural context, then into Bitcoin leverage recovery and macro confirmation shaping expectations for 2026.
1. Positioning Shifts and Early-Year Risk Appetite
Early behavior from traders and investors often sets the tone for the year ahead
Bitcoin (Bitfinex Longs vs Price)
Crypto Tice highlights the inverse relationship between Bitfinex longs and Bitcoin price. Historically, elevated long positioning has coincided with local tops, while declines in long exposure have tended to precede renewed upside. Current data shows Bitfinex longs beginning to roll over, a setup that has previously aligned with bullish continuation rather than sustained downside.
Nasdaq (First 5 Days of the Year Performance)
Subu Trade notes that both the S&P 500 and Nasdaq finished the first five trading days of the year higher. Historically, when the Nasdaq is positive during this window, the following 12 months have been positive 93% of the time with an average return near 25%. Early participation continues to act as a reliable sentiment signal.
Summary
Early-year positioning suggests risk appetite remains intact. Leverage appears to be resetting rather than overheating, while early equity strength continues to skew favorably on a forward-looking basis.
2. Breadth and Structural Confirmation in Equities
Rallies supported by participation tend to persist longer
S&P 500 (Percentage of Stocks at 52-Week Highs)
The Market Stats reports that 12% of S&P 500 stocks are at 52-week highs, the strongest reading in over a year. Historically, similar breadth thrusts have led to positive one-year returns 83% of the time, averaging roughly 13%.
S&P 500 (Dow Jones Transportation Average – New All-Time High)
The Dow Jones Transportation Average has reached a new all-time high for the first time in over a year. Historically, these breakouts have been followed by positive one-year returns 94% of the time, averaging around 12%. Transport leadership often confirms economic momentum rather than signaling exhaustion.
S&P 500 (Percent of Stocks Above 200-Day Moving Average)
Subu Trade also highlights that over 90% of Dow Jones’ stocks are trading above their 200-day moving average. The last comparable occurrence was in 2021, after which the S&P 500 delivered positive one-year returns 100% of the time, with an average gain near 16%.
Summary
Equity breadth continues to confirm the rally. Participation is broad, leadership is expanding, and historical analogs consistently favor continuation rather than an imminent reversal.
3. Cross-Asset Momentum and Signal Confluence
Multiple independent systems are aligning rather than diverging
Risk Assets (DeMark 13, Trend Chameleon, Liquidity Expansion)
Jamie Coutts highlights a cluster of bullish confirmations triggering across markets, including DeMark 13 exhaustion signals, Trend Chameleon trend confirmation, and signs of expanding liquidity. Historically, when multiple independent systems align simultaneously, the probability of trend continuation increases materially compared to isolated signals. Rather than pointing to late-cycle excess, this signal cluster suggests improving market structure and momentum beneath the surface.
Summary
The alignment of multiple independent models strengthens the broader bullish case. Signal confluence historically matters more than any single indicator in isolation.
4. October 10 Crypto Liquidation: Structural Context
Understanding the dislocation helps explain why subsequent signals matter
Crypto Market Structure (October 10 Liquidation Thesis)
Bull Theory outlines a structural explanation for the October 10 crypto liquidation that frames the move as institutional positioning rather than organic market failure:
- MSCI threatens index removals (October 10)
- Crypto sells off sharply and uncertainty persists for roughly three months
- Prices remain suppressed as institutions wait
- Morgan Stanley files its ETF (January 5)
- MSCI cancels the removal threat (January 6)
This sequence suggests the drawdown functioned as a volatility and confidence reset rather than a breakdown in trend. In that context, the subsequent stabilization and signal recovery appear more consistent with accumulation than distribution.
Summary
The October liquidation appears mechanical rather than structural. This context helps explain why recovery signals are clustering instead of diverging.
5. Bitcoin Leverage and Cycle Reset Signals
Recovering leverage after price weakness has historically marked durable bottoms
Bitcoin (Open Interest Cycles)
Altcoin Screener data shows Bitcoin Open Interest approaching the end of its bottoming phase. Open Interest has crossed above its 180-day EMA and is beginning to use it as support. Similar transitions marked important local bottoms in early 2023, October 2023, September 2024, and April 2025.
A sustained move above approximately 9.6 billion in Open Interest would materially increase the probability that the leverage reset is complete. Historically, a resurgence in leverage following price weakness has skewed bullish rather than signaling excess.
Bitcoin (Weekly MVB Indicator)
Lawrence McMillan reports a fresh buy signal on his Bitcoin Weekly MVB indicator. Historically, this signal has triggered near major bear-market lows in 2015, 2019, and 2022.
Bitcoin (Hash Ribbons)
Charles Edwards notes a new Hash Ribbons buy signal. These signals have historically occurred near major cycle lows and near local lows during the current cycle.
Bitcoin (Copper/Gold Ratio RSI)
AO highlights breakouts in the RSI of the copper-to-gold ratio. Historically, these breakouts have preceded strong upside moves in Bitcoin, reflecting improving growth expectations and rising risk tolerance.
Summary
Bitcoin indicators now show a convergence of leverage recovery, miner stabilization, and macro-sensitive signals that historically align with accumulation phases.
6. Rotation Signals and the Altcoin Setup
Relative performance shifts often precede broader participation
Small Cap Altcoins vs Small Cap Equities (OTHERS/BTC and Russell 2000)
Bull Theory outlines a framework where OTHERS/BTC appears to be bottoming and attempting a breakout. When paired with a potential Russell 2000 breakout into new all-time highs, this setup has historically preceded periods of broader altcoin participation.
Summary
Rotation data suggests the groundwork for broader participation may be forming as relative strength begins to shift.
7. Liquidity, Macro, and Forward PMI Signals
Macro leads continue to support expansion rather than contraction
Global Macro (Central Banks Cutting Rates vs US PMI)
Altcoin Screener data shows that the percentage of central banks cutting rates, viewed against US PMI with an 11-month lead, continues to imply PMI acceleration into 2026.
Global Liquidity (Global M2 YoY vs US PMI)
Despite a one-month TradingView lag, Global M2 year-over-year growth with a five-month lead remains sideways but elevated, a configuration historically associated with continued expansion.
Earnings (US Citi Earnings Revisions Index)
The US Citi Earnings Revisions Index remains above zero and range-bound. With a two-month lead to PMI, this suggests stabilization rather than deterioration in fundamentals.
US Manufacturing (New Orders vs PMI)
New Orders with a one-month lead show a modest uptick from last month, consistent with gradual improvement rather than contraction.
Summary
Macro liquidity and leading indicators remain aligned with expansion. No major forward signal currently points to a growth shock.
Closing Summary
When viewed together, early-year positioning, equity breadth, multi-system signal confluence, Bitcoin leverage recovery, structural context from last quarter’s liquidation, and macro-leading indicators all point in the same direction. Rather than signaling exhaustion, the market appears to be transitioning from a reset phase into renewed participation. While volatility and narrative shifts will persist, the weight of the evidence continues to favor staying aligned with risk into 2026.
Indicator Summary Table
| Instrument | Indicator Name | Insight | Source Link |
|---|---|---|---|
| Bitcoin | Bitfinex Longs | Long positioning rolling over has historically aligned with upside continuation | Source |
| Bitcoin | Copper/Gold Ratio RSI | Breakouts historically preceded strong Bitcoin advances | Source |
| Bitcoin | Hash Ribbons | Signals often occur near cycle or local lows | Source |
| Bitcoin | Open Interest Cycles | OI crossing above 180D EMA has marked local bottoms since 2023 | Altcoin Screener |
| Bitcoin | Weekly MVB | Triggered near major bear-market lows historically | Source |
| Crypto | OTHERS/BTC | Bottoming followed by breakout has preceded altcoin seasons | Source |
| Nasdaq | First 5 Days of the Year Performance | 1 year later, 93% positive with avg return of +25% | Source |
| S&P 500 | % Above 200-Day MA | Extreme breadth historically led to positive 1-year returns | Source |
| S&P 500 | % Stocks at 52-Week Highs | High participation led to strong forward returns | Source |
| S&P 500 | Dow Transports ATH | Breakouts confirmed economic momentum | Source |
| Macro | Central Banks Cutting vs PMI | Continues to imply PMI acceleration in 2026 | Altcoin Screener |
| Macro | US Citi Earnings Revisions vs PMI | Holding above zero aligns with stable PMI | Altcoin Screener |
| Macro | Global M2 YoY vs PMI | Elevated liquidity supports expansion | Altcoin Screener |
| Macro | New Orders vs PMI | Slight uptick suggests gradual improvement | Altcoin Screener |
Large Caps
Due to a last minute trip, I won’t have time to publish all the altcoin outperformance data nor do a model portfolio update for this week so I will resume this next week. Prices have not changed much since last week so I anticipate there not being much insight anyways.
Bitcoin Update
Not much has changed from the last newsletter as Bitcoin continues sideways and forms a potential bottom. Bitcoin recently rejected from $93,000 but is still holding above its daily moving averages. There is some geopolitical uncertainty with Venezuela and now Greenland that may cause a short term liquidation to sweep the lows at $78,000. To form a bullish pattern, we need to see Bitcoin reclaim $93,000 on the weekly timeframe. If that fails to hold above $81,000 then the next area would be $74,000-78,000. Despite all the extreme fear in the markets lately and claims of a cycle top, we are still in a bull market as long as Bitcoin is holding above $74,000.
Ethereum Update
Ethereum is showing some progress as it’s reversing the downtrend. I would like to see it reclaim $3500 to confirm any continued upside. The other scenario is it continues sideways and it could revisit the lows around $2700 before going back up. If it doesn’t hold there then next area would be $2100-2400.
Solana Update
Similar to Ethereum, Solana is showing signs of a trend reversal. I would like to see it get above $150-160 for bullish continuation. Either it goes sideways here for a bit before going higher or it could go lower to $100-110. Need to see Solana reclaim $160 for any bullish momentum to return.
Sui Update
Sui had a strong pump in the past week and is now above its moving averages hovering around $1.80. It just barely closed the week near $1.80 so I would still be cautious and give it another week or two to see if this holds but progress still looks good nonetheless.
Dogecoin Update
Dogecoin is showing signs of a trend reversal. It’s trying to break through the $0.15 level. For bullish momentum to return, we need to see Dogecoin reclaim $0.17.
Pepe Update
Pepe is pulling back a bit from last week’s strong rally. As long as it holds above the 0.000056 level then I think we’ll likely see more upside from here.
