Key Crypto Events to Watch This Week: BTC, ETH, HYPE, XLM, and More

As we enter the first full week of January 2026, significant developments in the crypto space are on the horizon. These include protocol upgrades, shifts in institutional strategies, and key token events that could profoundly influence major blockchain ecosystems.

Traders are encouraged to strategically adjust their portfolios in anticipation of these impactful crypto news updates this week.

Bank of America’s New Bitcoin Allocation Strategy

In a major step towards institutional acceptance of cryptocurrency, Bank of America is now allowing wealth management advisors to suggest that clients allocate between 1% to 4% of their portfolios to cryptocurrency.

This policy, effective January 5, 2026, permits advisors from Merrill, the Private Bank, and Merrill Edge to recommend regulated Bitcoin exchange-traded funds (ETFs) like BITB, FBTC, Grayscale Mini Trust, and IBIT.

🚨 Bank of America Officially Promotes Crypto Investments

Bank of America has formally began advising clients to invest up to 4% of their portfolio in Bitcoin and other cryptocurrencies.

Transitioning from 'client-requested only' to 'advisor-recommended'. pic.twitter.com/voxlam2Mjf — Coin Bureau (@coinbureau)

This initiative is consistent with a broader trend among financial institutions; firms such as Morgan Stanley, BlackRock, Fidelity, Vanguard, SoFi, Schwab, and JPMorgan have all been enhancing their crypto product offerings. The move also coincides with recent regulatory adjustments and heightened client interest in digital assets.

Despite Bitcoin currently being down 30% from its all-time peak of $126,199, it has risen over 5% since the start of the year.

Bitcoin (BTC) Price Performance

(Source: BeInCrypto)

While Bank of America’s endorsement may boost mainstream acceptance, it’s important to remember that the Bitcoin market has seen $600 billion wiped off its market cap since October. Many small-cap indices are reaching lows not observed since November 2020, and recently launched altcoin ETFs have experienced quick downturns.

Speculation on the Fed Chair and Crypto Policies

Adding another layer of uncertainty to the market, President Trump is expected to reveal his nominee for the Federal Reserve Chair around January 9, 2026. Kevin Hassett, a prominent contender for the position, may influence a shift towards a more accommodative monetary policy if selected.

Hassett, currently the head of the National Economic Council, has advocated for swift rate cuts and supportive growth policies. His nomination could foster more liquidity in the market and potentially weaken the dollar, leading to an uplift in prices for Bitcoin, Ethereum, and various altcoins. This may also positively affect DeFi projects and Layer 2 protocols due to decreased borrowing costs and an increased risk appetite.

If Hassett is appointed as Fed Chair, the outlook for cryptocurrencies could be quite promising.

He is known as an aggressive "dove," pushing for lower rates and advocating for rapid economic growth.
He previously led a working group addressing digital assets, suggesting a commitment to pro-crypto policies.

Despite these potential benefits, there are concerns regarding the influence on the Federal Reserve’s autonomy. A nominated shift could disrupt bond markets and push capital towards digital assets, coinciding with other major crypto events and possibly amplifying market volatility.

Ethereum’s Layer 2 Infrastructure Enhancement

Ethereum is set to implement a key upgrade on January 7, 2026. This upgrade will increase the blob capacity per block, significantly lowering transaction fees for Layer 2 rollups. The Ethereum Foundation announced that BPO-1 is now live, enhancing the capacity to 15 blobs per block, with BPO-2 scheduled for January to introduce further scalability.

More Space for Rollups

(Source: Ethereum Foundation)

This upgrade will particularly benefit leading Layer 2 solutions, including Arbitrum, Optimism, and Base. By expanding data capacity without the need for a hard fork, Ethereum enhances its network security while cutting costs for users.

This move comes at a critical time, as competition from alternative Layer 1 blockchains grows. With increasing transaction volumes in DeFi, NFTs, and tokenized assets, efficiency is crucial. Ethereum’s approach to scalable Layer 2 solutions, while maintaining its decentralized nature, is vital to its ongoing value.

Stellar Launches New Privacy Testnet

Stellar is advancing its privacy capabilities with the introduction of Protocol 25 (X-Ray). A vote for the testnet will occur on January 7, 2026, followed by a mainnet vote on January 22. This upgrade will incorporate native support for BN254 – a widely used zero-knowledge elliptic curve – and Poseidon hash functions.

Introducing Protocol X-Ray, Focused on Privacy

(Source: Stellar)

With this enhancement, developers can create privacy-centric applications featuring on-chain zk-SNARK proof verification on Soroban, Stellar's smart contract platform. This aligns with Ethereum's efforts through EIP-196/197, easing the transition for projects that employ zero-knowledge technology from Ethereum and other EVM-compatible blockchains.

By supporting both Poseidon and Poseidon2 hash functions, Stellar aims to provide efficient and privacy-preserving contracts while ensuring transparency and compliance. This design allows developers to utilize trusted cryptographic standards without sacrificing auditability.

As privacy gains importance in regulatory discussions, Stellar is strategically positioning itself to appeal to institutions and compliance-focused users, balancing transparency with selective privacy.

Upcoming Token Unlocks and Milestones

Hyperliquid will see a notable event on January 6, 2026, when $30 million worth of HYPE tokens will unlock for early contributors. Token unlocks typically heighten selling pressure, and this situation will help gauge market sentiment concerning this decentralized perpetual exchange.

Hyperliquid (HYPE) Token Unlock Schedule

(Source: Tokenomist.ai)

Additionally, zkSync Era will be phased out on January 7, 2026, marking significant progress in scaling, as newer versions will deliver enhanced performance and security.

📌 "In 2026, we will be deprecating ZKsync Lite (also known as ZKsync 1.0), the original ZK-rollup we launched on Ethereum.

This will be a planned and orderly phase-out for a system that has fulfilled its purpose and does not affect any other ZKsync systems."
— ZKsync (@zksync)

Gnosis is also set to reveal its 3.0 vision and roadmap for 2026 during a January 7 AMA, potentially unveiling new partnerships or products in its decentralized infrastructure offerings for DAOs and prediction markets.

Other notable events include Huma Finance teasing a major announcement for January 5 and Folks Finance offering staking with a 30% APR until January 5.

Important Reminder:
“$FOLKS staking is open until January 5th.

→ 30 days lock • 30% fixed APR
→ Available via @kaizen_finance (DeFi) and @kucoincom (CEX)

Check the links and tutorials below 👇 🔗”
— Folks Finance (@FolksFinance)

This series of developments presents a market full of opportunities. With institutional adoption, protocol upgrades, and changing market dynamics, the coming week will undoubtedly test the resilience of crypto markets amid volatility.

Key Takeaways:

Bank of America now allows a 1-4% cryptocurrency allocation for clients.
Potential changes in Federal Reserve leadership may boost cryptocurrencies.
Ethereum’s upgrade will enhance Layer 2 efficiencies starting January 7.
Stellar introduces Protocol 25 for improved privacy.
Upcoming token unlocks may affect market sentiment and volatility.