To: AscendEX Community, Institutional Partners, and Global Investors

From: Bin Huang, Head of AscendEX Research Institute

Date: January 4, 2026

Reporting Period: December 29, 2025 – January 4, 2026

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1. Introduction: Rationality Amidst "Extreme Fear" and the Undercurrents of Capital

Happy New Year to the global AscendEX community and blockchain believers worldwide.

As we stand at the threshold of 2026, looking back at 2025 reveals a year of profound duality that has etched itself into crypto history. We witnessed the euphoria of Bitcoin shattering ceilings to reach an all-time high of $126,000 in October, only to be followed by the largest liquidation event on record—$19 billion wiped out in 24 hours due to sudden tariff shocks. This turbulent year has reshaped the wealth perception of countless investors and fundamentally altered the industry's underlying logic.

This week (December 29, 2025 – January 4, 2026), serving as the bridge between years, did not deliver the anticipated "Santa Claus Rally." Instead, the calendar turned amidst a palpable atmosphere of oppression, stagnation, and "Extreme Fear." As of Sunday evening, Bitcoin is consolidating tightly around the $89,000 mark, with the Crypto Fear & Greed Index languishing in the 24-29 range, teetering on the edge of capitulation. Retail confidence appears to have been eroded by the relentless end-of-year grind, with social media awash in pessimistic narratives of a returning bear market.

However, as Head of AscendEX Research Institute, my mandate is not to echo the emotional volatility of the crowd, but to pierce through the fog and reveal the truth of capital movements. Beneath the surface of this week's seemingly stagnant price action, profound structural shifts are occurring—events significant enough to dictate the industry's trajectory for the next three to five years.

On one hand, we are witnessing a massive retreat of retail capital, most vividly illustrated by the South Korean market. Constrained by draconian new regulations, approximately $110 billion has fled the Korean crypto ecosystem over the past year. This represents the exodus of "Old Money."

On the other hand, we are seeing a qualitative transformation in how "New Money" enters the arena:

• RWA Supremacy: The Total Value Locked (TVL) in Real World Asset protocols has historically surpassed that of Decentralized Exchanges (DEXs) for the first time, breaching $17 billion.Institutional Validation: HashKey Group has successfully priced its IPO in Hong Kong, with primary market subscriptions overwhelmingly oversubscribed despite the secondary market's gloom.Privacy Renaissance: Long-forgotten privacy assets like Zcash are displaying remarkable resilience, logging an 800% year-to-date gain amidst a tightening regulatory net.The opening of 2026 is not a prelude to a crash, but a painful transition period from "high-beta speculation" to "infrastructure allocation." If 2024-2025 was the "Year of Wall Street" driven by ETFs, 2026 is shaping up to be the "Year of Utility" driven by RWAs and compliant privacy tech.

In this edition of AscendEX Web3 Weekly, we will dismantle the narrative of a boring week with hardcore data and exhaustive analysis, revealing the critical signals that will determine your wealth magnitude in the coming cycle. Fasten your seatbelts as we dive into the deep ocean of on-chain data to track the true destination of capital.

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2. Market Overview: Structural Divergence in a Shrinking Volume Environment

The total global cryptocurrency market cap has maintained the psychological $3.16 trillion mark, characterized by shrinking trading volumes and a consolidation pattern. While overall volatility has dampened, sectoral divergence is extreme. Capital is aggressively rotating out of pure sentiment-driven assets (Meme Coins) and into infrastructure tokens with real yield and compliance prospects.

2.1 Core Asset Deep Dive

2.2 Market Sentiment & Flow Analysis

• Fear & Greed Index: The index fluctuated between 24 (Extreme Fear) and 29 (Fear) this week. Historically, prolonged periods in the "Fear" zone often precede a trend reversal. For contrarian investors, this zone typically represents a prime accumulation window.
• Open Interest (OI): The derivatives market is undergoing a healthy deleveraging. Bitcoin futures OI dropped by ~$0.5 billion to $27.3 billion, and Ethereum OI fell by ~$0.3 billion to $17.7 billion. This suggests that price stability this week is supported by spot buying rather than fragile leverage.
• The ETF Flow Pivot: The final week of December saw a brutal ~$940 million net outflow from US Spot Bitcoin ETFs, driven by tax-loss harvesting. However, on January 2 (the first trading day of 2026), the tide turned instantly with $646 million in net inflows. This "V-shaped" flow data perfectly confirms institutional tax planning behavior—selling to lock in losses for 2025 taxes, then immediately rebuying to reset positions for 2026. This implies that ETF inflows should strengthen in the coming weeks as new annual allocations are deployed.

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3. Headlines of the Week: Three Historic Shifts Defining the Landscape

This week was not just about price fluctuations; it was about a profound restructuring of the industry's underlying logic. The following three events will cast a long shadow over the crypto landscape in 2026.

3.1 The Collapse of the "Kimchi Premium": $110 Billion Exodus

The most sobering macroeconomic data of the week comes from South Korea. For years, Korea was known as the "ATM of Crypto," characterized by the "Kimchi Premium" where assets traded 10-20% higher due to closed capital controls and retail fervor. However, data released this week shows that under the weight of draconian regulations implemented in early 2025 (including bans on anonymous trading and leverage restrictions), approximately $110 billion has fled the Korean market over the last year.

• AscendEX Insight: This capital has not vanished; it has migrated. Significant wealth from Korean whales has relocated to jurisdictions with friendlier regulations and flexible tax structures, such as Dubai and Singapore. This explains the noticeable weakness in Asian trading hour liquidity and the ~40% volume contraction on exchanges like Upbit. Globally, this means the market has lost a significant "high-beta" retail liquidity pool, potentially leading to lower overall volatility but higher institutional dominance.

3.2 HashKey Group IPO: The Coming of Age for Compliant Exchanges

HashKey Group, Hong Kong’s premier licensed exchange, priced its IPO this week at HK$6.68 per share, raising approximately $207 million.

• AscendEX Insight: Against a backdrop of secondary market gloom, HashKey's IPO numbers are stunning: the retail tranche was 393 times oversubscribed, and the institutional tranche 5 times oversubscribed. This sends a powerful signal: Traditional capital is desperate for crypto exposure but distrusts unregulated offshore entities. They crave infrastructure like HashKey—fully licensed, audited, and operating in the sunlight. This IPO marks the beginning of the "Licensed Era" for Asian crypto finance, where exchange competition shifts from "listing speed" to "compliance depth."

3.3 RWA TVL Flips DEXs: DeFi Gets Real

According to DefiLlama, the Total Value Locked (TVL) in Real World Asset (RWA) protocols breached $17 billion this week, officially surpassing Decentralized Exchanges (DEXs) to become the 5th largest DeFi sector.

• AscendEX Insight: This is a historic inflection point. For the past five years, DeFi's prosperity was built on the internal circulation of "asset swaps" and "yield farming." The rise of RWAs signifies that capital is no longer satisfied with the phantom yields of on-chain games. Instead, it is seeking "Real Yield" linked to the physical economy—tokenized Treasury bills, credit, and commodities. With Fed rates still relatively high, protocols like Ondo and Canton offer a risk-free yield sanctuary for on-chain capital. DeFi is evolving from a "Casino" into a genuine "Capital Market."

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4. Sector Deep Dive: RWA Victory & The Privacy Coin Renaissance

While the broader market seemed dull, structural opportunities were crystal clear to the discerning eye.

4.1 RWA Sector: Canton Network's Explosion & Institutional Entry

The top gainer of the week belongs to Canton Network, with its token surging over 40% and market cap breaching $4.7 billion.

• The Driver: The Depository Trust & Clearing Corporation (DTCC)—the backbone of US financial markets—announced plans to pilot tokenized US Treasury bills on the Canton network.
• AscendEX Institute Comment: This is a massively undervalued signal. The DTCC processes quadrillions of dollars in securities transactions annually. Its choice of Canton validates the "App-chain" thesis. Canton won because it is a privacy-enabled blockchain designed specifically for institutional compliance, allowing assets to be interoperable without exposing sensitive trade data. This differentiates it from fully transparent chains like Ethereum. Investors should focus on RWA infrastructure that solves "institutional privacy" (e.g., Canton, Provenance) as a core theme for 2026.

4.2 Privacy Sector: Zcash (ZEC) defies the Odds

Amidst Bitcoin's consolidation, the legacy privacy coin Zcash has logged an astounding 800% year-to-date gain (looking back at 2025), holding firmly above $500 this week.

• Core Logic:
  1. Regulatory Reflexivity: As global regulations tighten (MiCA in EU, KYC in US), the utility of privacy increases. When every on-chain interaction is surveilled, privacy becomes a scarce luxury asset.
  2. Corporate Accumulation: Cypherpunk Holdings (NASDAQ: CYPH) announced it has increased its ZEC holdings to 1.76% of the total supply, with a stated goal of reaching 5%. This is the application of the "MicroStrategy Playbook" to the privacy sector—institutions hoarding deflationary assets to hedge against surveillance and debasement.
  3. ETF Narrative: Bitwise's filing for a Zcash ETF, while a long-shot, has re-legitimized the asset in the eyes of the mainstream.
• Investment Implication: The privacy sector is undergoing a "value re-rating." Beyond ZEC, look for compliant privacy solutions (like Railgun or next-gen zero-knowledge pools) to catch a bid as the narrative strengthens.

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5. On-Chain Data Highlights: The Brutal Truth of Chip Exchange

This week's on-chain data reveals a ruthless game of "handover" in the market. Metrics from Glassnode and CryptoQuant suggest that bottoming characteristics are forming.

5.1 Spike in Realized Losses

As Bitcoin traded below $90,000, the psychological defense of Short-Term Holders (STH) collapsed. Data shows that from late December to early January, the proportion of coins sent to exchanges at a loss spiked significantly.Analysis: This is a classic "Capitulation" signal. When short-term holders rush to exit at a loss, it indicates the market is cleansing itself of weak hands. Historically, peaks in Realized Loss often correlate with local price bottoms.

5.2 Divergence in Stablecoin Supply

• USDT: Market cap remained flat at $186.8 billion. This indicates that despite retail panic, the capital (largely Asian and offshore) has not left the ecosystem; it has simply moved to the sidelines to wait.
• USDC: Market cap dropped 0.9% to $76.3 billion. USDC is heavily used by US institutions. The drop is likely due to year-end tax settlements and balance sheet adjustments. We expect USDC market cap to rebound after mid-January as institutions redeploy capital.

5.3 The Resolve of Long-Term Holders

Despite the price drop, Long-Term Holders (155+ days) have not capitulated. Instead, they increased their holdings by approximately 10,700 BTC over the last 30 days.Analysis: This is the strongest bullish divergence available. While retail sold in panic at $89,000, Whales were absorbing liquidity. Coins are moving from weak hands to strong hands, reducing overhead resistance for the next leg up.

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6. Fundraising & Project Dynamics: The "Quality Over Quantity" Era

The primary market remains active but highly selective. The total crypto fundraising for the final week of the year hit $316.2 million.6.1 Key Fundraising Events

• HashKey Group ($250M / IPO): The undisputed king of funding this week. Beyond the IPO, HashKey closed a massive $250 million round in late December. This war chest is earmarked for expanding compliant operations in Bermuda and Japan, and building out the HashKey Chain (L2). This reinforces the thesis that "Compliant Infrastructure" is the safest bet for big capital.
• Architect ($35M): Architect, the derivatives trading platform founded by former FTX US President Brett Harrison, closed a Series A round. Investors include traditional giants like MIAX.
  • Comment: Architect aims to build a hybrid trading structure bridging TradFi and DeFi. This raise proves that despite the FTX collapse, the demand for high-performance, professional-grade derivatives tools has never been higher.

6.2 Massive Unlock Alert

Investors must be vigilant regarding token unlocks next week (Jan 5 – Jan 11), which could cause short-term price shocks:

• Ethena (ENA): ~2.37% of circulating supply unlocks on Jan 5. As a synthetic dollar protocol facing yield compression, ENA could face selling pressure.
• Hyperliquid (HYPE): ~3.61% of supply unlocks on Jan 6. As a hot decentralized perp DEX, HYPE has been strong. If price holds up post-unlock, it confirms robust demand.
• Aptos (APT): ~1.59% unlocks on Jan 11.

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7. Regulation & Macro: The Policy Pivot

Regulatory news was mixed this week but deeply impactful on specific asset classes.

7.1 Japan Tax Reform: A Lifeline for XRP

Japan's ruling party is advancing a critical tax reform proposal to change crypto taxation from "Miscellaneous Income" (up to 55%) to a flat 20% "Separate Taxation".Impact: Japan is one of the most active crypto trading markets globally and a stronghold for XRP. A tax cut of this magnitude will massively incentivize trading activity and attract institutional flows in Japan. This is the primary fundamental driver behind XRP's relative strength this week.

7.2 Hong Kong Stablecoin Regime: Dawn of the HKD Stablecoin

The Hong Kong Monetary Authority's (HKMA) licensing regime for stablecoin issuers officially came into effect this week.

• Outlook: We expect to see the first batch of compliant HKD Stablecoins in Q1 2026. This will open payment corridors between Web3 and Asian traditional commerce (cross-border trade, supply chain finance), potentially triggering a new explosion in RWA adoption.

7.3 SEC's Shift in Tone

Acting SEC Chair Mark Uyeda launched a crypto task force led by Commissioner Hester Peirce (aka "Crypto Mom").

• Interpretation: This is an extremely positive signal. Peirce has long criticized the "Regulation by Enforcement" approach. The task force suggests a pivot toward a clear "Regulatory Framework," which would drastically reduce compliance costs for US firms like Coinbase and Kraken, and potentially accelerate the approval of new ETFs (like SOL ETF).

7.4 Macro Interest Rate Expectations

The market is currently pricing in four Federal Reserve rate cuts in 2026. Despite the recent bounce in the DXY, the long-term expectation of liquidity easing remains intact. This provides the macro liquidity floor keeping the crypto market cap above $3 trillion.

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8. Chart of the Week: The Line in the Sand (Liquidity Heatmap)

Chart Theme: Bitcoin Liquidity Heatmap & Compression Zone

Based on comprehensive data from CoinGlass and TradingView, Bitcoin's liquidity map shows a clear "Compression" characteristic:

• Support Wall ($87,000 - $88,000): A high density of Long Liquidations and spot bid orders are clustered here. This acts as a breakwater; barring a Black Swan event, it is difficult to penetrate in a single move. This explains why BTC dips to $88,000 were bought up rapidly this week.
• Resistance Wall ($92,000 - $94,000): A massive accumulation of Short Liquidations sits here. This is the bears' last line of defense.

Deep Insight: Price is compressed in a narrow 5% channel. Extreme volatility squeezes usually precede explosive moves. If bulls can leverage the renewed ETF inflows to break $92,000, it will likely trigger a cascade of short liquidations (Short Squeeze), propelling price rapidly toward $95,000 or even $100,000. Conversely, losing $87,000 would trigger panic selling. Given on-chain accumulation, the probability currently skews slightly to the upside.

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9. Outlook for Next Week: The January Showdown

Looking ahead to next week (Jan 5 – Jan 11), watch these key variables:

1. Validation of ETF Flows: The $646 million inflow on Jan 2 was a great start, but was it a one-off? We need to watch flows closely in the first three days of next week. If we see sustained inflows >$200M/day, BTC will likely reclaim $90,000.
2. Unlock Stress Tests: Watch ENA and HYPE on their unlock days. If prices rise on unlock days, it is a massive signal of strength, indicating OTC buyers are absorbing the supply.
3. Macro Guidance: US Non-Farm Payrolls (NFP) and ISM Manufacturing data are due. Weak data reinforces rate cut bets (Bullish for crypto); hot data could reignite inflation fears (Bearish).
4. Geopolitical Wildcards: Monitor the US proposal regarding deploying Bitcoin mining in disputed Ukraine regions. This politicizes hashrate and introduces unpredictable volatility.

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10. Conclusion: Planting Seeds in the Winter of Doubt

The first week of 2026 served a cold reality check to those dreaming of an "up only" market. But this check was necessary. It washed away leverage, arrogance, and the tourists looking for a quick flip.

To the AscendEX community: Do not be overly bearish here. When everyone is talking about the Korean exodus, the technical bear market, and the fragility of $87,000 support, look at what the Smart Money is actually doing:

They are building RWA rails on Canton Network. They are securing licenses via HashKey. They are hoarding Zcash to hedge privacy. They are silently accumulating Bitcoin at $88,000.

The market structure is undergoing a qualitative change: from "Casino" to "Exchange," from "Toy" to "Tool." At the tail end of this cleansing cycle, patience is your greatest edge. Stay in the game, survive the chop, and you will be the winner of the next cycle.

AscendEX Research Institute

Bin Huang