Bitcoin underperformed other debasement-sensitive assets in January 2026, even as the U.S. dollar posted its weakest monthly performance since April 2025, according to a new market outlook from Grayscale.
The debasement trade, driven by concerns over rising government debt and fiat currency depreciation, intensified amid geopolitical tensions, tariff threats, and questions about the U.S. Federal Reserve’s independence. Gold rose 13% in January, silver gained 19%, and several emerging market currencies strengthened. Bitcoin, however, fell despite its long-standing positioning as a scarce, non-sovereign asset.
Bitcoin call and put options data points to subdued sentiment—but that’s not the full story.
Despite near-term caution, we see a positive outlook for crypto over the intermediate and long term, supported by structural adoption and market evolution.https://t.co/26tjsPEeG0
— Grayscale (@Grayscale) February 2, 2026
Regulatory delays and quantum debate pressure sentiment
Grayscale attributed Bitcoin’s weakness partly to renewed uncertainty around U.S. crypto regulation. Progress on the long-anticipated market structure legislation stalled after a scheduled Senate Banking Committee markup was cancelled, extending the timeline for regulatory clarity. The delay has increased concerns that the bill could face further obstacles in 2026.
At the same time, debate around the long-term impact of quantum computing on blockchain security intensified. Media coverage of quantum-related risks surged in January, and major industry players, including Coinbase and Ethereum developers, announced new initiatives to address post-quantum cryptography. While Grayscale views quantum risk as a distant issue, the discussion appears to have discouraged near-term capital allocation.
Fund flows favour precious metals over crypto
Investor positioning reflected this caution. U.S.-listed spot Bitcoin exchange-traded products recorded approximately $2.3 billion in net outflows during January, while major precious metals funds attracted more than $3.5 billion in inflows. Options markets also pointed to defensive sentiment, with elevated demand for downside protection.
Despite the short-term pressure, Grayscale maintained a constructive long-term outlook for Bitcoin, citing its predictable supply, growing institutional infrastructure, and expanding use cases across tokenization, stablecoins, and decentralized finance as conditions for renewed capital inflows once uncertainty eases.
Notably, crypto markets weakened during early Asian trading, extending a cautious tone seen over the weekend as global risk sentiment deteriorated. More than $550 million in leveraged long positions were liquidated, with Bitcoin briefly slipping below before stabilising.
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