Hello,

Welcome to the 26th edition of the Fiat Bridge Daily Crypto Newsletter.

Over the last 24 hours, the crypto market experienced a notable pullback, shedding approximately $100 billion in total market capitalization, a decline of about 3.3%.

This was largely fueled by escalating fears of a U.S. government shutdown, with prediction markets like Polymarket assigning an 80% probability to the event by January 31.

Bitcoin is trading near $87,000, down 0.7% over the past 24 hours, as the broader cryptocurrency market faces sustained downward pressure amid macroeconomic headwinds and investor caution.

Ethereum has declined 1.5% to $2,900, continuing its underperformance against traditional safe-haven assets like gold, which just hit an all-time high record of $5,080.

In today's edition: institutional views on Bitcoin's true value, ARK Invest's bullish moves during the downturn, and Japan's regulatory push for crypto ETFs.

Let’s begin.

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… back to the article 👇

Japan's Financial Services Agency (FSA) is preparing to amend its regulatory framework to permit cryptocurrency-linked exchange-traded funds, with 2028 identified as a potential early approval target. Major Japanese financial groups, including Nomura Holdings and SBI Holdings, are already positioning to develop the first crypto ETFs, according to Nikkei reporting.

This is a multi-billion-dollar unlock. Nikkei estimates Japanese crypto ETFs could eventually command 1 trillion yen (~$6.4 billion) in assets under management. Unlike direct spot Bitcoin and Ethereum ETF approvals in the US and Hong Kong, Japan's approach uses the ETF vehicle to lower barriers for retail investors through traditional brokerage accounts.

The significance lies not just in the AUM projection, but in a structural pattern: major jurisdictions are systematically moving crypto from speculative to institutional infrastructure. If Japan follows through, you can expect similar moves in other developed markets over the next 18-24 months.

According to Coinbase's Q1 2026 survey of institutional and independent investors, 71% of institutions believe Bitcoin is undervalued at its current $85,000-$95,000 price range.

Critically, 80% of surveyed institutional investors said they would either hold or buy on any additional 10% market decline, signaling conviction during weakness.

Institutional positioning has shifted from panic selling to opportunistic accumulation. More than 60% have either maintained or increased their crypto positions since October, when Bitcoin hit its $126,080 all-time high. Even amid current headwinds, institutions view the market cycle as an accumulation or bear market phase, not capitulation.

This is an alpha signal worth tracking. When institutions stop selling and start selectively buying weakness, it often precedes retail participation.

The survey also reveals potential economic tailwinds: Coinbase expects two Federal Reserve rate cuts (50 basis points total) in 2026, alongside consumer inflation holding steady at 2.7% and real GDP growth exceeding 5%.

These conditions typically favor risk-on assets.

Ark Invest, one of the most visible institutional players in crypto, deployed $21.5 million into crypto company shares, including Coinbase and Circle as Bitcoin fell below $90,000. This is not a one-off trade; it reflects a pattern of prominent institutions using volatility as a buying opportunity.

While crypto ETPs are seeing outflows, strategic investors are accumulating. This divergence, between fund flows and selective institutional buying, mirrors the pattern seen during previous bear markets that ultimately reversed.

Ark's moves matter because the firm's investment track record influences broader institutional decision-making. When a recognized leader in innovation allocates capital to crypto during downturns, it signals they see value others are missing.

Combined with the Coinbase survey data showing 80% of institutions would buy on 10% dips, you're seeing institutional conviction crystallize at lower prices.

Today's market reflects a critical inflection: Despite short-term headwinds like government shutdown risks and market dips, institutional optimism, strategic investments, and regulatory advancements point to undervalued opportunities and sustained growth.

Key takeaway: View volatility as a buying window, backed by data on undervaluation and adoption. Institutional accumulation at current levels, combined with regulatory clarity on the horizon, suggests the risk-reward is skewing favorable.

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