The landscape for Bitcoin and Ethereum exchange-traded funds (ETFs) is currently marked by substantial outflows. Investors are increasingly moving their capital into international equities, leading to a notable decline in the assets held by these cryptocurrency ETFs.
As of early 2026, US spot Bitcoin ETFs have experienced a significant drop in total assets, plummeting from approximately $115 billion to around $83 billion. In a similar fashion, Ethereum ETFs have seen an even sharper contraction, with total assets decreasing from about $18 billion to near $11 billion. This trend is not merely a fleeting fluctuation; it represents a clear departure of capital from the cryptocurrency sector.
In contrast, international equity ETFs have recorded their strongest inflows in several years. Notably, January 2026 saw record allocations into global ex-US funds, which captured roughly one-third of total ETF inflows despite accounting for a smaller proportion of overall assets. This shift signals a significant rotation in investor sentiment.
Recent market data indicates that at least 115 stocks within the S&P 500 index have declined by 7% or more in just eight trading sessions. Despite this, the S&P 500 remains only 2% below its all-time high. Such volatility highlights the broader market”s complexities, particularly as institutional investors appear to be reducing their exposure to crowded US growth trades, including crypto, and reallocating to more affordable international markets amid improving macroeconomic conditions.
Furthermore, recent data on US employment has led to increased Treasury yields, creating tighter financial conditions. Higher yields enhance the attractiveness of bonds in comparison to riskier assets like Bitcoin and Ethereum, which are often viewed as high-beta liquidity plays. This dynamic is contributing to a structural headwind for these cryptocurrencies.
In 2024, crypto ETFs were pivotal in driving demand, significantly amplifying upward price movements through consistent inflows. However, the current mechanism is reversing, with ETFs shifting from being a source of demand to functioning as distribution channels. While this development does not undermine the long-term case for cryptocurrencies, it does impose short-term challenges on liquidity.
Until the rotation of capital slows or macroeconomic conditions improve, ongoing outflows from these ETFs may continue to exert pressure on Bitcoin, Ethereum, and the broader cryptocurrency market.
