A broad pullback in crypto investment products coincided with a broader market softness, as the total crypto market capitalization slipped roughly 6% on Thursday. Bitcoin (CRYPTO: BTC) and Ether (CRYPTO: ETH) funds together recorded nearly $1 billion in outflows, among the year’s largest single-day moves, according to SoSoValue. Spot Bitcoin exchange-traded funds (ETFs) led the retreat, shedding about $817.9 million and marking the largest daily outflow since November 2025. The dip arrived as risk-off sentiment extended beyond digital assets, with gold retreating about 4% after a recent spike above $5,300 per ounce, based on TradingView data. The day’s market mood also reflected pointers from the traditional technology space, as AI-related stock worries and a sharp slide in Microsoft shares added to the caution in equities.
Key takeaways
- Bitcoin (CRYPTO: BTC) and Ether (CRYPTO: ETH) funds registered nearly $1 billion in net outflows on Thursday, one of the year’s largest moves, underscoring a shift in appetite for top-tier crypto exposures.
- Spot Bitcoin ETFs alone saw $817.9 million leave the market in a single session, the steepest daily withdrawal since late 2025, highlighting the fragility of near-term demand for physically backed BTC products.
- Gold prices fell about 4% as risk sentiment soured and equities, including those tied to AI, faced pressure; Microsoft (EXCHANGE: NASDAQ: MSFT) shares sank about 10%, amplifying the cross-asset pullback.
- Bitcoin ETF flows for January turned negative as weekly outflows persisted, with the week tally nearing $978 million and December-to-January transitions remaining unsettled for many funds.
- Altcoin fund performance remained negative, with spot Ether ETFs pulling out around $155.6 million and XRP (CRYPTO: XRP) funds off about $92.9 million; Solana (CRYPTO: SOL) ETFs also posted modest withdrawals of $2.2 million.
- Overall, crypto ETPs still command significant assets under management, with about $178 billion across crypto exchange-traded products, while spot BTC ETFs account for roughly 6.5% of Bitcoin’s estimated market capitalization of about $1.65 trillion; still a meaningful liquidity channel for institutional players.
Tickers mentioned: $BTC, $ETH, $XRP, $SOL, $MSFT
Sentiment: Bearish
Price impact: Negative. The ongoing outflows and asset-price declines indicate a risk-off environment pressuring both crypto equities and spot assets.
Trading idea (Not Financial Advice): Hold. A wait-and-see stance may be prudent until there is clearer evidence that liquidity improves and macro catalysts stabilize.
Market context: The retreat in crypto ETFs mirrors a wider liquidity pullback in risk assets, with investors reassessing exposure as macro headlines and sector rotations drive correlations higher between digital-asset products and traditional markets.
Why it matters
The weekend and week’s flows paint a portrait of a market still heavily driven by sentiment and macro risk rather than purely on-chain signals. The dual pressure on spot BTC/ETH products and the outflows in altcoin ETFs reveal how sensitive crypto investment products remain to broad risk-off dynamics. With ETF inflows/funding often used by institutional participants to gain or unwind exposure, a sustained pattern of redemptions can translate into thinner daily price moves for the underlying assets. The data suggest that even well-established products — including spot BTC ETFs, which continue to represent a sizable slice of the asset’s investable demand — are susceptible to shifts in investor risk tolerance that accompany geopolitical and macro headwinds.
From a market structure perspective, the outflows widen the disconnect between headline price action and long-run narrative of crypto as a macro-hedge or risk-on asset. While Bitcoin and Ether still command tens of billions in AUM across ETPs, and despite their relative dominance in investor allocations, fund flows point to a cautious crowd prioritizing liquidity protection and redemptions over new capital allocation. The Bitcoin ETF segment alone has accumulated roughly $107.65 billion in assets under management, representing approximately 6.5% of Bitcoin’s current market capitalization, underscoring the brokerage and fund-structure role in the pricing and liquidity framework of the space.
The broader risk environment is also shaping how crypto markets interact with traditional tech equities. The indiscriminate sell-off in AI-related shares, as illustrated by Microsoft’s rapid drawdown, feeds into a larger narrative of selective risk appetite rather than a targeted crypto downturn. This broader cross-asset mood can complicate trading strategies that rely on near-term catalysts in crypto markets, making the coming weeks a test of whether the weakness is transitory or a signal of a more persistent capital reallocation away from crypto-priced instruments.
Industry observers have pointed to elevated leverage in certain derivatives venues as another contributor to the slide. In a note cited by CryptoQuant, high leverage positions at a decentralized derivatives exchange were found to have suffered material losses in a short period, illustrating how leverage can amplify market moves across a downturn. The biography of risk surrounding crypto ETPs is not purely driven by on-chain metrics; it also reflects how investors deploy (and unwind) leverage via derivatives and related products when sentiment shifts.
Beyond the price action, underlying structural elements such as asset stewardship and regulatory signals continue to shape the landscape. The UK market has already shown a willingness to adopt crypto ETPs through new launches, as Valour and other providers received regulatory clarity in the wake of lifting certain restrictions; these evolutions could reintroduce fresh demand channels for BTC and ETH exposures once the macro fog clears.
What to watch next
- Next batch of crypto ETP flow data and updated weekly aggregates to assess whether outflows persist or begin to reverse.
- Regulatory developments in the UK and elsewhere that enable new ETPs and potential shifts in product structure for BTC and ETH exposures.
- Liquidity and leverage metrics in key derivatives venues, particularly around Hyperliquid and other decentralized platforms mentioned by market analytics firms.
- Price action for BTC and ETH in the near term, with attention to macro catalysts and potential support levels that could trigger a capex-based repricing of risk assets.
Sources & verification
- SoSoValue data on outflows for BTC and ETH and the scale of spot BTC ETF withdrawals
- TradingView data on gold price movements and context around XAUUSD
- CoinShares and related AUM updates for crypto ETPs and overall crypto ETP market share
- CryptoQuant commentary on leverage exposure and Hyperliquid’s long positions wiped out during the session
- UK regulatory moves and related ETP launches such as Valour’s BTC/ETH products post-FCA developments
