In January 2026, the crypto market saw a notable drop, influenced by macroeconomic uncertainty, inflated valuations in both traditional and digital assets, and a lack of significant positive catalysts for the sector. Despite the overall downturn, prediction markets and RWA tokenization stood out, showing growth while other areas struggled.
The Federal Reserve’s January 27–28 meeting sent a clear message to markets: policymakers intend to stay the course in 2026. The Fed held interest rates steady at 3.5%–3.75%, maintaining its restrictive stance as inflation remains above target. Risk assets sold off immediately, with cryptocurrencies taking the hardest hit.
Bitcoin fell from $90,400 to $83,383 within 48 hours of the announcement, a sharp 7.3% decline that highlighted crypto’s acute sensitivity to monetary policy.
The appointment of Kevin Warsh as the next Federal Reserve Chair offered a glimmer of hope for eventual policy relief. President Trump’s nomination of Warsh, who takes office on May 15, 2026, suggests a potential pivot toward lower rates and a more rules-based framework over the medium term. Yet markets remain doubtful that any substantial easing will arrive soon.
If monetary policy provided the baseline stress, trade policy amplified it. The Trump administration’s aggressive tariff regime dominated headlines throughout January, injecting uncertainty into global markets and crypto alike.
By January 23, the weighted average applied tariff rate had reached 14.0%—the highest level since 1946. Trump imposed 50% duties on metals, 25% on semiconductors and autos, and reciprocal tariffs of 10–40% on major trading partners. Yale’s Budget Lab projected the tariffs would shave 0.4 percentage points off GDP growth, push unemployment up 0.7 points, and eliminate 1.3 million jobs in 2026.
Beyond monetary tightening and trade tensions, equity valuations themselves present a growing risk to the crypto market.
The Buffett Indicator, which measures total stock market capitalization relative to GDP, reached approximately 205% in January 2026, well above its historical average of 100% and significantly higher than levels seen before previous market corrections. When this ratio exceeds 200%, Warren Buffett has historically characterized markets as “strongly overvalued.”
Valuation concerns extend beyond this single metric. The S&P 500’s price-to-earnings ratio climbed to roughly 29x, compared to its historical average of around 16x. This represents a premium of 75% above the long-term mean, placing current valuations in territory typically associated with market peaks rather than sustainable growth.
These elevated metrics suggest the stock market has outpaced underlying economic fundamentals, creating conditions ripe for a correction. For Bitcoin and the broader crypto market, such a correction would likely prove particularly painful given their strengthening correlation with U.S. equities and their position as higher-risk assets in investor portfolios.
Amid market uncertainty, metals gained significant momentum in January. Silver showed particularly strong price dynamics, becoming the second-largest asset by market capitalization after gold. Platinum, palladium, copper, and other metals also posted notable gains, signaling a global reassessment of assets.
Data obtained by API
Meanwhile, Bitcoin closed January down 10%, marking its fourth consecutive month of decline. Notably, Bitcoin, which outperformed the S&P 500 on a monthly basis throughout most of 2025, now significantly lags the index.
Data source: CryptoRank API
In the event of an S&P 500 correction, Bitcoin is unlikely to decouple given that the U.S. economy serves as the primary source of liquidity for the entire crypto market. Recent crypto regulation and increased institutional participation have only strengthened this correlation between Bitcoin, the broader crypto market, and the American economy.
Mirroring Bitcoin’s decline, Ethereum fell 17.7% in January, marking its fifth consecutive monthly loss.
Data obtained by API
Remarkably, significant technical improvements over the past year, which directly enhanced user experience by reducing gas costs and accelerating transaction times, have failed to lift Ethereum’s price. This suggests the market had already priced in these technical upgrades.
Given the ongoing momentum in stablecoins and current bearish market sentiment, Tether could potentially overtake Ethereum to become the second-largest cryptocurrency by market capitalization.
Data source: CryptoRank API
One of the main takeaways for Solana in January: the trenches are still alive. Most memecoin metrics saw a sharp increase, reaching their highest levels in months. Daily token launches hit 45.5K on January 30, while the Q4 2025 peak was only 24.4K. Daily launchpad volume reached $183M vs a $150M peak in Q4, and daily launchpad active addresses climbed to 320K vs 139K.
The memecoin revival started with the PENGUIN token, which originated from Encounters at the End of the World by Werner Herzog. The token quickly gained traction on CT, followed by strong trading volumes. Its market cap surged to $150M within a few days, but has since retraced to $36M.
Across broader Solana metrics, the memecoin resurgence pushed monthly fees to $30M, the highest level since September. DEX volume grew ~20% MoM and now accounts for nearly 35% of total DEX volume across all chains. Active addresses increased from 67.5M to 81M, while network transactions reached 2.39B, the third-highest result in Solana’s history.
TRON hit an important milestone in January – the network’s active addresses reached 100M for the first time in history. A spike in one activity metric often drives growth across others, and that was exactly the case for TRON last month. Stablecoin market cap also hit a new ATH of $84.5B, while chain fees at $29M remained in line with the previous two months. Meanwhile, network transactions on TRON set another ATH in January at 342M.
We recently published an in-depth research piece focused on TRON’s performance in H2 2025. It explores how the chain is strengthening its role as a key stablecoin settlement layer and what may come next. Make sure to check it out if you haven’t yet.
BNB Chain fees grew from $14.5M in December to $20M last month. However, this is still 72% below its 3-year high recorded in October, when the perp DEX rally began. DEX volume fell to its lowest level since April at $51B, while perp volume retraced to a “pre-Aster era” level of $14B.
It’s quite interesting that the overall decline didn’t stop BNB Chain from reaching an all-time high in monthly active addresses (83.7M) and posting the second-highest monthly transaction count (509M).
On the development side, BNB Chain rolled out the Fermi upgrade. Its main outcome is faster block finality (0.75 → 0.45 seconds) alongside higher throughput.
Overall, it was a brutal month for altcoins. The total market cap of the top 100 alts fell to $740B, the lowest level in months. The Altcoin Season Index (ASI) hovered between 20 and 30 out of 100 throughout January.
Among tokens with over $100M market cap, the best performers were AXS (+112% YTD), STABLE (+117%), and KITE (+63%). Among large caps (>$500M market cap), HYPE posted a notable 28% gain, finally breaking a long-standing bearish trend. The token’s growth was largely driven by strong traction around HIP-3, a feature that allows developers to launch their own perpetual markets directly on Hyperliquid’s core engine. Other notable moves included COCA (+50%), PUMP (+24%), and CC token’s surge to a new ATH of $7B.
Among January’s large-cap laggards, NIGHT led with a 45% decline, followed by ZEC, which lost 43% amid the departure of its core development team. UNI and ENA both fell around 30% due to broader market weakness and liquidity rotation within DeFi. Several L1/L2 tokens also struggled – ARB dropped 27%, while MNT and APT declined by 25% and 23%, respectively.
The one sector that can’t stop growing, even in these market conditions, is prediction markets. In January, spot volume grew 50% MoM, setting a new ATH of $27B. Total monthly transactions jumped 77% and reached another ATH at 113M. Both Kalshi (30M → 54.5M) and Polymarket (30M → 52M) showed comparable growth by this metric. Monthly open interest also climbed, hitting the $1B milestone for the first time ever.
As usual, sports remained the dominant category in Kalshi’s volume, accounting for 63% in January. However, growing influence from other categories has been a notable trend since autumn 2025. For context, in September, sports accounted for 86% of volume. The two key categories driving this shift are crypto and politics.
Polymarket’s volumes are traditionally more evenly distributed across categories. While sports is also the top category there, the gap between other segments is much narrower, followed by crypto, economics, politics, and entertainment. Although the two platforms’ total volumes are nearly identical, Polymarket leads by a wide margin in sports-excluded volume – $4.2B vs $1.1B.
Polymarket also made strong progress on the business development side, securing partnerships with DAZN, Major League Soccer, Dow Jones, and the Golden Globes, further expanding its presence beyond Web3.
The RWA sector continues to expand, both in total value locked and in the range of assets being tokenized. Total RWA value set a new ATH in January, rising from $20.9B to $23.7B. Tokenized U.S. Treasuries remain the dominant category, capturing $9.5B in value, or ~40% of the entire RWA market. They are followed by commodities, private credit loans, and institutional alternative funds.
The number of RWA holders has grown ~8x since last summer and now stands at an all-time high of 795K. Public equities (294K) and commodities (206K) account for most holders, even though their combined dollar value represents only 25% of the total RWA market. At this pace, RWA holders could surpass 1 million within months.
Ethereum remains the leading chain, accounting for 60% of total RWA value. BNB Chain comes second with 9.2%, followed by Liquid Network with 6.5%. Solana ranks fourth, while Stellar is fifth, recently entering the $1B RWA value club.
Tokenized gold deserves special attention. Gold prices breached the psychological $5,000/oz level, helping drive massive on-chain trading interest in tokenized gold and silver across DeFi platforms and pushing 24-hour volumes into the billions. Leading the charge are industry giants Paxos and Tether, both of which reported record inflows this month. Paxos Gold (PAXG) alone saw $248M in inflows in January, pushing its market cap to $2.2B.
At the same time, Tether’s gold-backed token (XAUT) has seen its supply surge as the company continues adding to its physical reserves. The company has accumulated over 140 tons of physical gold, valued at roughly $23 billion, which would place it around 23rd globally by gold reserves, just behind the Central Bank of Brazil (~145 tons), if it were classified as a country.
This momentum also aligned with growth in Hyperliquid’s HIP-3 ecosystem, where permissionless perpetual markets enable builders to launch RWA-linked products such as commodity perps. In total, HIP-3 markets account for $42B in trading volume, 34M trades, and nearly 100K unique traders. Current open interest across HIP-3 markets stands at $880M. trade(.)xyz now captures 89% of HIP-3 volume. As of February 3, silver is the platform’s top tokenized RWA by trading volume at $1.72B, followed by gold ($0.48B) and XYZ100, an index representing the 100 largest non-financial public companies ($0.36B).
Long-term projections highlight the scale of this trend. McKinsey & Company estimates the tokenized asset market could reach $2-4T by 2030, while Boston Consulting Group forecasts a more aggressive $16T scenario.
As the crypto market has become increasingly intertwined with the American economy, the industry’s trajectory will be determined by U.S. economic performance, legislative developments, and global trends such as rising metals demand.
In the current environment, prediction markets and RWA tokenization stand out as exceptions, demonstrating growth amid broader market weakness. Both sectors expand the range of on-chain instruments available to investors: prediction markets appeal primarily to retail participants, while RWA projects attract institutional capital seeking exposure to tokenized real-world assets.
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