The Daily Drip

✅ Top Takeaways

• Fed hawks rattle markets:January FOMC minutes revealed deep divisions over the rate path, with several members open to potential hikes if inflation persists, strengthening the dollar and pressuring non‑yielding assets like Bitcoin well below the $70K level.
• Harvard rotates from BTC to ETH:The Ivy League endowment sold 21% of its Bitcoin ETF holdings worth $72M and simultaneously purchased $87M in Ether ETFs, while Goldman Sachs CEO David Solomon disclosed owning "very little Bitcoin" personally.
• Geopolitics lifts gold, not crypto:Reports of potential U.S. military strikes on Iran as early as Saturday sent oil above 4% and pushed gold back above $5,000, with safe‑haven flows bypassing digital assets entirely and reinforcing BTC's struggle as an inflation hedge.

📰 Crypto Market Summary

Bitcoin fell to $66,524, logging a modest 0.16% daily move, after Federal Reserve minutes showed policymakers sharply divided on the rate path, with several members suggesting hikes remain on the table if inflation fails to cool further. Geopolitical risks stemming from U.S.–Iran tensions and intensifying safe‑haven flows into gold added another layer of pressure on crypto sentiment.

Ether dropped 1.37% to $1,928, XRP fell 1.34% to $1.40, and Solana declined 0.90% to $80.84. Network activity for XRP plunged 26% as active addresses dropped from 55,080 to 40,778, raising concerns about thinning liquidity and real demand, while altcoins broadly lagged despite continued institutional interest in payment infrastructure.

The January FOMC minutes revealed deep divisions, with "several participants" open to describing policy in "two‑sided terms" including potential hikes. This hawkish tone strengthened the dollar above the 97.70 level and pressured non‑yielding assets like Bitcoin, overshadowing earlier optimism for mid‑2026 rate cuts and White House criticism of a New York Fed tariff study added further policy uncertainty.

Oil jumped over 4% as reports emerged that U.S. military strikes on Iran could occur as soon as Saturday, raising supply disruption fears at the Strait of Hormuz. Gold reclaimed $5,000 per ounce on safe‑haven demand, once again outperforming crypto as investors fled risk assets in favor of physical stores of value.

Goldman Sachs CEO David Solomon disclosed owning "very little Bitcoin" personally, while Harvard University sold 21% of its Bitcoin ETF holdings worth $72 million and purchased $87 million in Ether ETFs. The move signals selective institutional rotation rather than outright crypto abandonment among elite allocators, with ETH emerging as the preferred vehicle at current valuations.

With ETF flows recording $173.1M in net outflows and the S&P Cryptocurrency Broad Digital Asset Index down 2.43% on the day, the market faces a challenging setup heading into the weekend, particularly if geopolitical tensions escalate and the Fed's hawkish tone is reinforced by upcoming economic data.

🌍 Macro & Policy Lens

A hawkish Fed, a stronger dollar and geopolitical flashpoints are rewriting the near‑term risk calculus for digital assets.

• Fed divided on hikes vs. cuts: January minutes showed "several participants" willing to consider rate increases if inflation reaccelerates, a stark shift from the dovish pivot narrative that had briefly lifted crypto sentiment earlier this month.
• Dollar breaks above 97.70: The greenback's advance following the FOMC release tightened financial conditions across risk assets, with BTC and ETH both sliding as the rate‑cut probability for June–July was repriced lower by rate markets.
• Iran risk reshapes weekend outlook: Reports of potential U.S. military action as soon as Saturday have sent oil surging and gold back above $5,000, creating a risk‑off backdrop that historically pressures leveraged crypto positions headed into thin weekend liquidity.

For crypto, the macro setup is now unambiguously challenging: a hawkish Fed, a stronger dollar, rising geopolitical risk and gold outperformance all argue for caution until the data and policy picture clarifies.

💰 Flows & Market Structure

Spot ETFs recorded $173.1M in net outflows yesterday, with BTC and ETH both seeing significant redemptions as institutional players de‑risked ahead of geopolitical and macro uncertainty.

• BTC ETFs: roughly $133.3M in net outflows, reflecting broad institutional de‑risking as the FOMC hawkish tone and Iran tensions rattled confidence in BTC's near‑term upside.
• ETH ETFs: about $41.8M in redemptions, a notable reversal from Wednesday's $48.6M inflow surge and a sign that even the BTC‑to‑ETH rotation trade paused under macro pressure.
• SOL ETFs: approximately $2.0M in modest inflows, a bright spot in an otherwise risk‑off session reflecting some continued belief in Solana's longer‑term positioning.
• XRP ETFs: flat at $0 net flows, consistent with the token's 26% drop in active network addresses and traders sitting on the sidelines awaiting a clearer catalyst.

The S&P Cryptocurrency Broad Digital Asset Index fell 2.43% on the day and is now down 25.54% year‑to‑date, erasing the modest gains from earlier in the week.

Harvard's BTC‑to‑ETH rotation and Goldman's disclosure signal that elite institutions are not abandoning crypto but selectively repositioning, a dynamic that could define near‑term flow patterns as macro uncertainty lingers heading into the weekend.

📊 Sentiment Dashboard

Extreme fear deepens as hawkish Fed signals, geopolitical risk and heavy ETF outflows combine to keep traders firmly defensive.

🔢 Market Performance

• BTC, ETH, XRP, BNB, SOL, DOGE and ADA all posted daily losses as hawkish Fed minutes, dollar strength and geopolitical risk combined to create one of the week's broadest red sessions.
• BCH stands out as the week's strongest performer at nearly 12% weekly gain while TRX remains one of the few tokens in positive YTD territory at +1.16%.
• Stablecoins such as USDT remain anchored near $1.00, keeping settlement infrastructure intact as the market navigates thin weekend liquidity and elevated geopolitical risk heading into Saturday.

⚡ Risk & Market Lens

A hawkish Fed, a strengthening dollar, escalating U.S.–Iran tensions and $173M in ETF outflows leave crypto in one of its most challenging weekend setups of 2026.

Key risks heading into the weekend: whether potential U.S. military action against Iran materializes Saturday and triggers a broader risk‑off wave, how thin weekend liquidity amplifies any downside moves in leveraged crypto positions, and whether Harvard's BTC‑to‑ETH rotation signals a broader institutional trend.

For now, the path of least resistance remains cautiously lower — the macro, geopolitical and flow data all point toward continued defensive positioning until the Fed's rate path clarifies and geopolitical tensions either escalate or de‑escalate over the coming days.

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Disclaimer

This newsletter is for informational and educational purposes only and is not investment advice, solicitation, or an endorsement of any strategy or asset. H2cryptO does not warrant data accuracy or completeness.

Crypto assets are highly volatile; always consult professional advisors, use caution, and comply with local laws before making strategic, financial, or investment decisions.