Inflation Down, Crypto Up?

It’s been a frantic week on the geopolitical front, as the US has flexed its muscles and Iranians have risen up against the mullahs. If you were hoping for a quiet year ahead, you’re going to be disappointed.

The crypto market has been a relatively sleepy backwater of late, but that could be set to change as US politicians lock horns over the CLARITY Act, while the highly anticipated Innovation Exemption from the SEC also looms large. There’s also key data due this week that could signal lower inflation in the US to boot. Today’s forward guidance looks at how all eyes will be on Washington, DC over the coming days, and why that might signal green candles ahead for the crypto market.

And it’s not just US politicians duking it out either. Trouble has erupted in the Zcash community, leading to a mass walkout of developers. We take a look at what’s been going on and assess what it means for the project and for ZEC’s prospects.

💹 Best Crypto Portfolio 2026 💹

After a traumatic 2025, many are assessing their crypto portfolios and wondering what the heck to do now. The game has changed, altcoins have struggled (to put it mildly) and the crypto market is rapidly becoming more of an institutional playground as retail investors remain conspicuous by their absence. So, what’s the play from here?

In today’s video, we look at how the market is set to evolve further this year and which sectors are the likely winners. We also examine where fresh investment is likely to come from and how to best get exposure to the biggest emerging trends. As crypto’s evolution speeds up, we need to adapt, or die.

You can watch that video here.

📈 Crypto Market Forecast 📈

A rotation between large cap and small cap US stocks appears to be underway. That’s because the Russell 2000 has outperformed the S&P 500 so far this year, granted that it’s only been a few days. Even so, the RUT now appears to be on the brink of a massive, multi-year breakout. If this breakout occurs, it could foreshadow capital rotating into crypto.

That’s because the RUT has historically been correlated to the crypto market, as recently noted by JP Morgan. This makes sense when you consider that small cap stocks and cryptocurrencies are at the same end of the risk spectrum. It makes even more sense when you realize that there tends to be lots of overlap between the types of investors that trade these assets: retail.

As most crypto investors will know, there tends to be rotation within the crypto market as well. It’s assumed that capital first flows into BTC, then into ETH, and then into other altcoins. At first glance, this so-called ‘path to altcoin season’ hasn’t occurred (or never occurred if the bull market is over). Upon closer inspection, however, it’s possible that it began last summer.

That’s because Bitcoin Dominance has clearly been in a downtrend since June 2025. Logically, this is mostly because of the increase in ETH/BTC (since BTC.D consists primarily of the strength of large cap altcoins relative to BTC, starting with ETH). However, the fact that ETH/BTC has been in an uptrend since last spring suggests there is some rotation at play.

Further evidence for this can be seen in the viral OTHERS/BTC chart, which appears to have bottomed and could be on the brink of another leg higher. The thing is that these ratio charts (BTC.D, ETH/BTC, OTHERS/BTC etc.) do not tell us anything about the price. Crypto prices could continue falling, and these ratios could continue looking bullish, thereby suggesting rotation.

Still, there are reasons to believe that this rotation could be positive for crypto prices. Besides the correlation between the Russell 2000 and the crypto market, there are macro and crypto catalysts coming up that could boost the markets. The main ones to watch on the macro front this week are the CPI and PPI for December, which come out on Tuesday and Wednesday.

Real-time inflation data from Truflation suggests that inflation in December will come in much lower than expected. This makes sense, since oil prices in December were even lower than in November, and rental costs fell in December. Energy goes into everything, and rents have been a key reason why inflation has taken so long to fall, so a drop in both should lower inflation.

The main catalyst to watch on the crypto front meanwhile is progress around the CLARITY Act, with votes in the Senate scheduled on Thursday. What’s interesting is that mainstream media outlets have been reporting the strong presence of crypto lobbyists on Capitol Hill leading up to these votes. Note that these are just committee votes - there will be many more votes to go after that.

As you may have heard, a government shutdown could occur at the end of January, since the current stopgap bill to keep the government up and running expires on the 31st. What you may not have heard is that the chances of a government shutdown have fallen quite sharply in recent weeks, with Polymarket pricing in a 23% chance of a shutdown happening at the time of writing.

This means that the preliminary votes on the CLARITY Act in the Senate could lead to a floor vote sooner than later, granted that passing the next government funding bill would be the priority. This doesn’t change the fact that the current situation is similar to the one leading up to the passing of the GENIUS Act last summer, which caused crypto prices to rally considerably.

The difference is that this time, the SEC is finally expected to introduce its innovation exemption, which would temporarily legalize everything in crypto in the US. SEC chairman Paul Atkins had specified late last year that the innovation exemption would occur sometime during or before January. As such, it’s possible this announcement could come alongside CLARITY Act progress.

In sum, the next week is looking bullish for the crypto market due to risk-on rotation both within stocks and crypto, and the macro and crypto catalysts which could amplify this rotation. Just keep in mind that there are still geopolitical risks lurking in the background…

😟 Trouble at Zcash 😟

Zcash (ZEC), a 2016-era privacy coin, was one of the best performers in Q4 2025.

It rallied by 600% in just 90 days after seeing a surge in network adoption, social validation, and ecosystem development. Not to mention, the narrative of Zcash being a better version of BTC also helped pull in a lot of interest from retail and institutional investors alike. Overall, it seemed like ZEC would continue to hold strong in 2026, with its price momentum inspiring confidence in the broader privacy sector.

However, certain events have recently put this outcome in jeopardy.

Notably, an internal clash last week at Electric Coin Company (ECC) - Zcash’s core development team - saw ZEC’s price drop more than 20% in four hours. Specifically, the crash followed news of the entire ECC staff resigning after a clash with Bootstrap, the company’s nonprofit board.

According to various sources, the dispute was primarily over funding control, roadmap autonomy and compliance priorities. But, to truly understand this dispute, let’s start with a bit of context.

You see, much of Zcash’s recent network growth coincides with the launch of Zashi – a user-friendly mobile wallet on Zcash launched by ECC in 2024. Zashi helped simplify shielded transactions and integrated features like near-instant payments.

Given its success, ECC had proposed to privatise Zashi, seeking external investment to spin it off into a for-profit entity. It argued the move would accelerate development and commercialisation without burdening the nonprofit structure. However, according to Bootstrap's board, this proposal violated US nonprofit laws. They warned that privatising Zashi could expose the organization to donor lawsuits, regulatory scrutiny, or even forced unwinding of deals. The board rejected this plan to uphold compliance and protect Zcash's integrity.

In response, Josh Swihart, the now former CEO of ECC, claimed the board’s stance was in "clear misalignment" with Zcash's mission. He claimed their actions amounted to "malicious governance" that altered employment terms, effectively forcing the team out through constructive discharge – a legal term for when working conditions become intolerable.

To understand the ECC’s frustration better, there is a bit of history you need to know.

You see, unlike most crypto projects, Zcash is a proof-of-work (PoW) chain. In PoW projects, all coins are minted and distributed as block rewards over time to anyone who helps secure the network. Typically, there are no pre-mined tokens set aside to reward further technical development. Naturally, this creates a lack of incentives for teams to contribute or build on the network with a long-term focus.

To combat this, Zcash incorporated a “dev fund” mechanism into its block reward system. Put simply, a fixed portion of all mining rewards on the network was automatically sent to specific wallet addresses embedded directly into the protocol to fund Zcash development work. At launch, this mechanism diverted 20% of block rewards to ecosystem players, including ECC (7%), the Zcash Foundation (5%), and community grants (8%).

However, in 2024, an upgrade changed this incentive structure by combining the ECC and Foundation’s allocations into a single 12% allocation directed to a ‘lockbox.’ As the name suggests, all tokens sent to the lockbox are hard to access since it is a 2-of-3 multisig wallet with keyholders including Bootstrap (which oversees ECC), the Zcash Foundation, and Shielded Labs. This move was part of an effort to further decentralise Zcash governance and development.

While not a direct contributor, ECC’s lack of direct access to these block rewards constrained its ability to run and scale operations at the company. This also tied into another concern expressed by Swihart – operational bureaucracy and red tape. Swihart’s posts reveal that Bootstrap’s status as non-profit saw most development decisions at the company bogged down by red tape. The latest veto on privatising Zashi seems to have been the straw that broke the camel’s back.

While the ECC staff have effectively rage-quit, this is not necessarily a bad thing. Notably, just hours after the announcement, Swihart announced that the team had formed a new company to continue their work unhindered, including the launch of a new wallet called ‘cashZ.’ Notably, cashZ uses the same codebase as Zashi. Fundamentally, nothing has changed regarding the team’s commitment to Zcash. The only difference now is that the former ECC team is unburdened by red tape, potentially allowing them to build ecosystem applications at a faster pace.

The broader community also seems to be in support of Swihart and team. Many of Zcash’s biggest supporters, including Mert Mumtaz (CEO of Helius), Zcash co-inventor Eli Ben-Sasson, and the Winklevoss twins have responded positively to the development. If anything, bag holders seem to view the ZEC crash as a temporary dip in its long-term positive trajectory.

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No one said that investing in cryptocurrency was easy. That’s because if it was easy, everyone would be doing it and your returns would be limited. Volatility comes with the territory.

“Volatility is the price of admission. The prizes inside are superior long-term returns. You have to pay the price to get the returns.” - Morgan Housel

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Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.