Crypto investment products experienced a sharp reversal in momentum during the second week of January, recording $454 million in net outflows and interrupting the strong start to 2026. The shift followed changing macroeconomic expectations that reduced the likelihood of a Federal Reserve interest rate cut in March, prompting investors to reassess exposure to risk assets, including digital assets.
After attracting $1.5 billion in inflows during the first two trading days of 2026, crypto funds saw sentiment deteriorate rapidly. Over the following four days, $1.3 billion flowed out, erasing most of the early gains and highlighting how quickly market confidence can change in response to economic data.
Bitcoin and Ethereum Bear the Brunt
Bitcoin led the weekly losses, with $405 million exiting BTC-focused investment products. Interestingly, short-Bitcoin products also recorded $9.2 million in outflows, indicating that some investors closed both bullish and bearish positions amid uncertainty.
Ethereum followed with $116 million in withdrawals, while multi-asset crypto products saw $21 million leave the market. Together, these figures reflect a broad pullback from established digital assets as investors adopted a more cautious stance.
Select Altcoins Attract Fresh Capital
Despite the overall outflows, not all assets moved in the same direction. XRP stood out with $45.8 million in inflows, followed by Solana at $32.8 million and Sui at $7.6 million.
This divergence suggests a rotation rather than a full retreat from crypto. Some investors appear to be shifting capital away from large-cap assets like Bitcoin and Ethereum toward altcoins perceived to have stronger momentum or near-term catalysts. The split highlights a nuanced market environment where risk aversion coexists with targeted positioning.
U.S. Outflows Tip Global Flows Negative
Regional data shows that the United States was the primary driver of the decline. U.S.-based crypto investment products recorded $569 million in outflows, more than enough to push global flows into negative territory.
Outside the U.S., investor behavior was notably more resilient. Germany posted $58.9 million in inflows, Canada added $24.5 million, and Switzerland recorded $21 million in new investments. This regional contrast suggests that U.S. investors reacted more strongly to domestic economic signals, while international markets maintained a steadier outlook.
Overall, last week’s data points to a market recalibrating expectations rather than abandoning crypto altogether. While macroeconomic uncertainty triggered caution, the continued inflows into select regions and altcoins indicate that capital is being selectively repositioned across the digital asset landscape.