Insights 
VT 
History delivers a clear and repeated message to markets. When currencies fail, confidence deteriorates first, and institutional stability unravels soon after.
In 1923, Germany experienced hyperinflation, which destroyed the value of the mark, forcing people to transport cash in wheelbarrows just to purchase basic necessities like bread.
By November of that year, a single US dollar was worth 4.2 trillion marks. Household savings vanished, and within months, the political system collapsed under the weight of economic failure.
A similar pattern emerged in Indonesia during the 1998 Asian financial crisis. The rupiah lost nearly 80 percent of its value in a short span of time.
Soaring prices ignited widespread protests, and by May 1998, President Suharto stepped down after more than three decades in power.
For traders, these episodes matter because currency collapse rarely stays confined to FX markets. It rapidly reshapes political stability, capital movement, and demand for alternative assets.
Iran’s Currency Crisis and Capital Flight
That same sequence is now unfolding in Iran. Late last year, private lender Ayandeh Bank collapsed under nearly five billion dollars in non-performing loans.
Authorities responded by printing money to absorb the losses, a move that accelerated currency weakness rather than restoring confidence.
The Iranian rial, already under pressure from sanctions and long-standing policy challenges, entered a sharp downward spiral. After sustained losses through 2025, the currency reached fresh record lows near 1.5 million per dollar on the black market.
By late December, nationwide protests erupted as living costs surged and trust in financial institutions continued to erode.
For markets, this matters because currency breakdowns tend to trigger defensive capital behaviour. As the rial deteriorated, households and businesses sought alternative ways to preserve wealth, pushing demand outside the traditional banking system.
Why Crypto Gains Traction When Fiat Systems Fracture
History shows that governments often respond to currency failure with redenomination. Venezuela provides a recent case study. In 2018, the government introduced a “sovereign bolivar,” removing five zeros from the old currency.
Inflation persisted. By 2021, authorities rolled out a digital bolivar, stripping away six additional zeros.
The results were unchanged. By late 2021, roughly seven million bolivars were required to buy a single loaf of bread.
Those with access to US dollars through remittances or exports were better positioned, while workers paid solely in bolivar remained trapped in a rapidly shrinking economy.
To bridge this gap, many Venezuelans turned to cryptocurrencies. Digital assets became tools for receiving remittances, preserving income, and transacting beyond failing monetary systems. For traders, this explains why crypto adoption often rises during crises, even amid price volatility.
Iran’s Head Start in Digital Adoption
Iran differs from Venezuela in a critical way: crypto adoption is already well established.
By 2023, nearly one in five Iranians owned cryptocurrency, and close to one in three had used or invested in digital assets, among the highest adoption rates globally.
Years of sanctions and limited access to global finance pushed individuals toward Bitcoin and stablecoins long before the current crisis intensified. As a result, if banking stress deepens or political instability escalates, capital can migrate into digital assets rapidly, without the onboarding friction seen in other regions.
For global markets, this reinforces the view that crypto increasingly functions as financial infrastructure rather than pure speculation in fragile economies.
What Traders Are Watching Into 2026
Despite rising real-world adoption, crypto markets remain tightly linked to macro conditions. As of January 2026, expectations for prolonged high interest rates and restrictive US Federal Reserve policy have weighed on Bitcoin.
Regulatory uncertainty has added further pressure. In mid-January, a delay in a US Senate crypto bill pushed Bitcoin back below 95,000 dollars.
Early-year trading often remains uneven due to tax-driven flows and liquidity rebalancing. However, if inflation continues to moderate and major central banks shift toward easing later in 2026, liquidity conditions could improve meaningfully.
In such an environment, assets like Bitcoin may attract renewed inflows, particularly as necessity-driven adoption expands during episodes of currency stress.
Key Symbols to Watch
BTCUSD | XAUUSD | USDX | EURUSD | NAS100
Upcoming Events
| 19 Jan | USD | Bank Holiday | – | – | Thin liquidity may distort early-week price action |
| 20 Jan | GBP | BoE Governor Bailey Speaks | – | – | Refer to market structure for directional bias |
| 21 Jan | USD | President Trump Speaks | – | – | Monitor for policy and geopolitical signals |
| 22 Jan | USD | Core PCE Price Index m/m | – | 0.20% | Inflation sensitivity remains elevated |
| 22 Jan | USD | Final GDP q/q | 4.30% | 4.30% | Use structure for confirmation |
| 23 Jan | JPY | BoJ Policy Rate | 0.75% | 0.75% | Focus on guidance and yen reaction |
Key Movements of the Week
Bitcoin (BTCUSD)
- Bitcoin retreated below 95,000 following regulatory delays in the US.
- Elevated interest rates continue to cap near-term upside.
- Structural demand remains underpinned by emerging market adoption.
Gold (XAUUSD)
- Gold printed fresh all-time highs before consolidating.
- Safe-haven demand remains firm amid currency stress headlines.
- US policy signals remain the key directional catalyst.
US Dollar Index (USDX)
- USDX trades near the 99.10 monitored zone.
- Tariff rhetoric and rate expectations continue to support the dollar.
- Key resistance sits near 99.70 and 100.00.
S&P 500 (SP500)
- The 7,000 level remains a critical resistance area.
- Geopolitical risk could trigger pullbacks toward 6,840 or 6,795.
- Equity sentiment remains sensitive to macro stability.
Bottom Line
Markets remain deeply tied to the credibility of money itself. Currency stress across parts of the developing world continues to support demand for alternative stores of value, while tight global financial conditions keep short-term volatility elevated.
Crypto assets remain sensitive to interest rates and regulation, yet adoption driven by necessity, not speculation, continues to strengthen beneath the surface.
As traders look ahead, policy signals and inflation data will be central in determining whether defensive positioning persists or gives way to renewed risk appetite later in 2026.
