Market Downturn Despite US Government Shutdown Resolution
Cryptocurrency markets have extended their decline despite much-awaited political developments taking place in the US. On Wednesday, President Donald Trump signed a funding bill to end the record 43-day US government shutdown. The bill had previously passed through the Senate on Monday and was approved by the House of Representatives on Wednesday. This legislation provides funding to the government until January 30, 2026, granting Democrats and Republicans additional time to negotiate broader funding plans for the upcoming year.
The resolution of the government shutdown failed to stimulate demand among buyers of Bitcoin (BTC) exchange-traded funds (ETFs). Spot BTC ETFs experienced a brief resurgence on Tuesday, attracting $524 million in inflows. However, outflows quickly resumed, with a significant $866 million in daily net outflows recorded on Thursday, according to Farside Investors. Bitcoin subsequently fell to a six-month low of $95,900 on Friday, a level not seen since May, as its primary demand drivers continued to lack momentum.
Investments from ETFs and Michael Saylor’s MicroStrategy have been identified as the two principal vehicles driving demand for Bitcoin's price this year, according to Ki Young Ju, founder and CEO of crypto analytics platform CryptoQuant.
Bitcoin ETF Demand Stalls Despite Shutdown Optimism
The current lack of demand for spot Bitcoin ETFs is raising concerns about Bitcoin’s prospects for the remainder of the year. On Monday, the US Senate approved the funding bill, moving Congress closer to ending the shutdown. The legislation then proceeded to a full vote in the House of Representatives, which took place on Wednesday.
Despite optimistic news emerging from the US, spot Bitcoin ETF investments remained largely flat on Monday, with only $1.2 million in inflows recorded, according to data from Farside Investors. Charles Edwards, founder of Capriole Investments, commented that this trend is not one that should continue. He noted that risk assets typically see a strong bid in the weeks following a government shutdown, suggesting there is still time for the market to recover, but it requires a positive turn.
Geoff Kendrick, global head of digital assets research at Standard Chartered, recently told Cointelegraph that spot Bitcoin ETF inflows were the primary driver of Bitcoin’s momentum in 2025.
Expert Predictions for Future Crypto Market Performance
Matt Hougan, chief investment officer at Bitwise, expressed strong confidence that crypto markets will experience a significant boom in 2026, particularly given the absence of a late 2025 rally. Speaking at The Bridge conference in New York City on Wednesday, Hougan explained that a crypto market rally at the end of 2025 would have aligned with the traditional four-year cycle thesis, implying that 2026 would then mark the beginning of a bear market, similar to 2022 and 2018.
When asked to revise his prediction regarding a potential crypto market boom in 2026, Hougan stated, "I’m actually more confident in that quote. The biggest risk was [if] we ripped into the end of 2025 and then we got a pullback."
Hougan anticipates that interest in the Bitcoin debasement trade, stablecoins, and tokenization will continue to accelerate. He also argued that Uniswap’s fee switch proposal, introduced on Monday, would reinvigorate interest in decentralized finance protocols in the coming year. "I think the underlying fundamentals are just so sound," Hougan asserted. "I think these earlier forces, institutional investment, regulatory progress, stablecoins, tokenization, I just think those are too big to keep down. So I think 2026 will be a good year."
Arthur Hayes Advises Zcash Holders on Asset Security
The privacy coin sector has re-entered the spotlight following BitMEX co-founder Arthur Hayes's recommendation to Zcash holders to withdraw their assets from centralized exchanges (CEXs). On Wednesday, Hayes advised holders to "shield" their assets, a feature that facilitates private transactions within the Zcash network. He posted on X, "If you hold $ZEC on a CEX, withdraw it to a self-custodial wallet and shield it."
These comments coincide with significant price fluctuations observed in Zcash (ZEC) over the past few days. The token surged to $723 on Saturday before declining to $504 on Sunday. It then rallied to a high of $677 on Monday, only to experience another sharp drop. At the time of writing, ZEC was trading around $450, representing a 37% decrease from its Saturday peak. Analysts had previously cautioned that ZEC might undergo a sharp correction due to its relative strength index (RSI) reaching its highest reading after continuing to rally above its overbought zone.
Vitalik Buterin Champions Decentralization in "Trustless Manifesto"
Ethereum co-founder Vitalik Buterin has authored and signed the new "Trustless Manifesto," which aims to uphold the core values of decentralization and censorship resistance. The manifesto encourages builders to avoid adding intermediaries and checkpoints in the pursuit of adoption. Authored also by Ethereum Foundation researchers Yoav Weiss and Marissa Posner, the Trustless Manifesto states that crypto platforms sacrifice trustlessness from the moment they integrate a hosted node or centralized relayer. While seemingly minor at first, this practice can become a habit, progressively making the protocol less permissionless with each added checkpoint.
"Trustlessness is not a feature to add after the fact. It is the thing itself," the Ethereum Foundation members stated in the manifesto published Wednesday. "Without it, everything else — efficiency, UX, scalability — is decoration on a fragile core." They further emphasized, "When complexity tempts us to centralize, we must remember: every line of convenience code can become a choke point."
While the manifesto was not directed at any specific individual or company, some Ethereum layer 2 solutions have faced criticism for compromising decentralization in favor of scalability to accelerate adoption.
Sonic Labs Shifts Strategy Towards Business Value and Sustainability
Sonic Labs, the organization behind the Sonic layer-1 blockchain, has announced a significant strategic pivot. The company is moving away from emphasizing transaction speed to focusing on building long-term business value and token sustainability. Following its claim of industry-leading performance last year, Sonic Labs' next phase will concentrate on upgrades designed to deliver measurable financial outcomes. These include new Ethereum and Sonic Improvement Proposals (EIPs and SIPs), reductions in token supply, and revamped rewards for network participants.
Mitchell Demeter, the new CEO of Sonic Labs, stated, "Every decision we make moving forward will be guided by the principles of building real value, with price, growth, and sustainability always in focus." Demeter further elaborated in a Tuesday X post that the focus aims to bring "measurable, lasting value" for builders, validators, and tokenholders. He added, "Our mission at Sonic is to move beyond hype and build a sustainable business model for a layer one, that creates, captures, and returns real value to tokenholders."
The new fee monetization upgrade will feature a tiered reward system for builders and fixed rewards for validators. Sonic Labs will also increase the rate of programmatic Sonic (S) token burns, which involves permanently removing tokens from circulation to reduce supply. Sonic claims to be the world's fastest Ethereum Virtual Machine (EVM) chain, boasting a "true" finality of 720 milliseconds (ms). Finality is the assurance that a transaction is irreversible once it has been added to a block on the blockchain ledger.
DeFi Market Overview: Most Top Cryptocurrencies End Week in Decline
According to data from Cointelegraph Markets Pro and TradingView, most of the 100 largest cryptocurrencies by market capitalization concluded the week in negative territory. The privacy-preserving Dash (DASH) token experienced the most significant decline in the top 100, falling 45%. Following Dash, the Internet Computer (ICP) token saw a decrease of over 27% on the weekly chart.
