Friday Market Breakout
January 2, 2026
The first official trading day of 2026 and Bitcoin at $90,200 (+1.8% 24h) after breaking above $90,000 during U.S. trading hours—a RARE occurrence after weeks of U.S. session weakness. Ethereum at $3,111 (+3.9% 24h), smashing through psychological $3,000 barrier with bullish engulfing pattern on weekly chart.
THE SQUEEZE: Bitcoin's Bollinger Bands compressed to less than $3,500—TIGHTEST since July. Two weeks consolidation $85K-$90K sets up MASSIVE volatility explosion. Historical pattern: squeezes this tight precede 15-25% moves within 7-14 days.
PATTERN BREAK: FIRST time since November, BTC rallied during U.S. trading hours. Q4 2025 saw systematic selloffs when American markets opened. Strategy (MSTR) +3.1%, Coinbase +3.4%, miners +8-10%. The "U.S. session curse" just broke.
I. BREAKING HEADLINES & MARKET IMPACT
• BOLLINGER BANDS SQUEEZE - TIGHTEST SINCE JULY 2025
Data: Bollinger Bands narrowed to <$3,500—LOWEST since July. BTC traded tight $85K-$90K range for two weeks. Classic 'squeeze' setup preceding major price swings.
Impact: July 2025's similar squeeze preceded BTC rally $65K→$85K (+30% in 21 days). Current compression suggests 15-25% move imminent within 7-14 days. Direction TBD but magnitude clear.
• BTC BREAKS $90K - U.S. SESSION STRENGTH SIGNALS REGIME CHANGE
The Pattern Break: BTC rose above $90K during U.S. hours Friday—REVERSAL of Q4 pattern where crypto sold off daily during American sessions. Price $90,200 (+1.8% 24h). Volume $47.2B (elevated from $35-40B average).
Crypto Stocks Surge: Hut 8 +10.2%, CleanSpark +9.8%, Strategy +3.1%, Coinbase +3.4%, Galaxy +7.2%. CONFIRMS institutional re-engagement.
• ETHEREUM SMASHES $3,000 - BULLISH ENGULFING SIGNALS STRENGTH
ETH surged $3,111 (+3.9% 24h)—breaking $3K barrier. Weekly chart shows BULLISH ENGULFING pattern. RSI 53.52 (neutral, room to run). MACD histogram positive/expanding. Volume $29.55B across exchanges (highest since mid-Dec).
• CARDANO POPS 7% - ALTCOIN ROTATION BEGINNING?
ADA jumped 7% in Asian trading, outperforming BTC/ETH. Currently $0.36. Catalysts: Midnight mainnet Q1 launch, Leios upgrade. PEPE +26%, PENGU +12%. Early altseason signals but NOT full rotation yet.
• BITCOIN ETFs LOSE RECORD $4.57B IN TWO MONTHS
U.S. spot BTC ETFs worst stretch on record: $4.57B outflows Nov-Dec ($3.48B Nov, $1.09B Dec). BTC fell 20% same period. ETH ETFs lost >$2B. But analysts disagree panic thesis: 'Market in equilibrium as weak hands exit, strong balance sheets absorb supply.' —Vikram Subburaj, Giottus
II. TECHNICAL ANALYSIS & TRADER POSITIONING
BITCOIN TECHNICAL BREAKDOWN
Bollinger Bands: Upper $92.5K | Middle $88.6K | Lower $84.7K | Width $7.8K (3.5% of price—EXTREMELY tight)
RSI: Daily 51.3 (neutral, room to run) | 4H 58.7 (approaching overbought but not extended)
Moving Averages: 50-day $91.2K | 100-day $95.4K | 200-day $98.2K (trading below all = overhead resistance)
Support Levels: S1: $88.6K (20-day SMA) | S2: $85K (psych level) | S3: $82.5K (multi-year trendline MUST HOLD) | S4: $80K (Nov low)
Resistance: R1: $92.5K (BB upper, 50-day MA) | R2: $95K (measured move target) | R3: $98.2K (200-day MA) | R4: $102K-$105K (squeeze breakout)
ETHEREUM TECHNICAL BREAKDOWN
Candlestick: Weekly bullish engulfing = HIGH CONVICTION signal. Current $3,111 (+3.9% 24h)
Indicators: RSI 53.52 | MACD positive/expanding | BB position 0.8854 (near upper band = strong buying)
Support: S1: $3,000 (psych) | S2: $2,960 (20-day SMA) | S3: $2,900 | S4: $2,775 (breakdown level)
Resistance: R1: $3,177 (needs break) | R2: $3,300-$3,350 (measured move) | R3: $3,447 (BB upper) | R4: $3,500 (Elliott Wave)
Relative Strength: ETH +3.9% vs BTC +1.8% = OUTPERFORMANCE = Key altseason signal
DERIVATIVES & POSITIONING
Funding Rates: BTC 0.0089% (slight bullish bias) | ETH 0.0112% (moderate bullish) = NEUTRAL (no crowded positioning)
Open Interest: BTC Futures $28.4B (stable) | ETH Futures $12.7B (increased from $11.2B) = OI rising WITH price = genuine demand
Options: ETH $8K calls Jan 2026: 10,700+ contracts traded 24h on Deribit. Far OTM = sentiment indicators showing long-term bullish positioning
Liquidations: BTC Long Liq: $87.5K ($2.4B), $85K ($4.1B) | Short Liq: $92K ($1.8B), $95K ($3.2B) = MORE fuel above = bullish asymmetry
III. Q1 2026 PRICE PREDICTIONS & OUTLOOK
BITCOIN Q1 2026
Current: $90,200
Base (50%): $95K-$105K | Squeeze resolves bullish, Fed cuts Jan, ETF flows turn positive
Bull (20%): $110K-$125K | Perfect storm: Fed cuts + CLARITY Act + ETF surge + altseason
ETHEREUM Q1 2026
Current: $3,111
Base (55%): $3,400-$3,800 | Holds $3K, breaks $3,177, Elliott Wave $3,500, Fusaka upgrade
Bull (20%): $4,200-$5,000 | Institutional accumulation, relative strength continues, altseason leadership
HIGH-CONVICTION ALTCOIN PICKS
1. ARBITRUM (ARB) $0.78 → Target $1.40-$1.80 (+79-131%) | Layer-2 leader. $18.2B TVL. Stylus upgrade Q1. Gaming/DeFi migration.
2. CHAINLINK (LINK) $14.20 → Target $22-$28 (+55-97%) | RWA infrastructure. SWIFT partnership. CCIP adoption. BlackRock/JPM tokenization needs LINK.
3. POLYGON (MATIC/POL) $0.51 → Target $0.85-$1.10 (+67-116%) | Enterprise adoption. Disney, Starbucks, Reddit. Polygon 2.0 upgrades Q1.
4. RENDER (RNDR) $7.20 → Target $12-$16 (+67-122%) | AI compute demand exploding. Decentralized GPU network. Vision Pro integration.
5. IMMUTABLE X (IMX) $1.32 → Target $2.20-$2.80 (+67-112%) | Web3 gaming. AAA launches Q1-Q2. zkEVM operational. Gods Unchained, Illuvium.
IV. CRYPTO TWITTER SENTIMENT
Willy Woo (@woonomic): "Bitcoin's Bollinger Bands squeeze at levels not seen since July is THE setup. Historical data: squeezes this tight resolve with 15-25% moves. Next 10 days VIOLENT in either direction."
CryptoCon (@CryptoConCarne): "ETH breaking $3K with bullish engulfing NOT to be ignored. ETH outperforms BTC = capital rotation follows 2-3 weeks later. ADA +7% is canary. Altseason loading..."
Raoul Pal (@RaoulGMI): "Boring middle of cycle—between capitulation and euphoria. This is when generational wealth built. Slow grind to $100K over 6-9 months, THEN explosive to $150K+ late 2026/2027."
V. MAJOR HEADLINES
🏦 JPMorgan Tokenized Money Market Fund on Ethereum | One of first major Wall Street banks deploying on public blockchain. Enables real-time settlement, DeFi collateral. Validates institutional-grade infrastructure.
📊 Bitcoin ETFs Worst Stretch Ever: $4.57B Outflows Nov-Dec | Q4 institutional appetite declined sharply. BUT analysts see 'equilibrium' not panic—weak hands exit, strong balance sheets absorb.
🎮 Web3 Gaming Surges - IMX/AXS/GALA Leading | Multiple AAA games entering beta Q1. Gaming = crypto's first REAL non-speculative use case. Market sizing: $5B→$15B+ in 2026.
🔒 Iran Using Crypto for Arms Deals to Bypass Sanctions | FT reports Iran accepts crypto for weapons with foreign governments. Demonstrates actual sovereignty utility.
💎 BTC Miners Pivot to AI Infrastructure | Hut 8, TeraWulf, IREN expanding into AI compute/data centers. Stocks +8-10% on AI narrative. Less BTC price dependent.
📈 Polymarket: 80% Odds BTC Hits $100K Before 2027 | But only 26% probability $150K in 2026. Market sees base case bullish but mega-targets uncertain.
🚀 CryptoQuant Warns Potential Bear Market Already Started | Julio Moreno: Bull score index flashing warnings for weeks. Predicts BTC bottom $56K-$60K in 2026 based on realized price patterns.
VI. CONCLUSION & TRADING PLAN
THE VERDICT
Risk/reward STRONGLY favors longs above $88K with tight stops at $85K. Pattern break (U.S. session buying) + Bollinger squeeze + ETH relative strength + altcoin leadership creates RARE alignment. Probability-weighted: 60-65% bullish for measured move to $95K-$105K over 2-4 weeks.
TRADING PLAN - BITCOIN
• Entry: Scale in $88K-$90K zone
• Stop Loss: $84,800 (below BB lower + multi-year trendline)
• Target 1: $95K (measured move, take 30%)
• Target 2: $98.2K (200-day MA, take 30%)
• Target 3: $102K-$105K (squeeze breakout, let 40% run)
• Risk/Reward: ~3.8:1 to T1, ~8:1 to T3
TRADING PLAN - ETHEREUM
• Entry: $3,050-$3,100
• Stop Loss: $2,940 (below 20-day SMA)
• Target 1: $3,300 | Target 2: $3,500 | Target 3: $3,800-$4,000
• Risk/Reward: ~3.2:1 to T1, ~5.5:1 to T3
DISCLAIMER: This newsletter provides market analysis and trading intelligence for informational and educational purposes only. It is NOT financial advice. Cryptocurrency trading carries substantial risk of loss. Past performance does not guarantee future results. Always conduct your own research, understand the risks, and never invest more than you can afford to lose. The Rekt Reports and its authors are not registered financial advisors. Trade responsibly.
