Core Insights - US Spot Bitcoin and Ethereum ETFs are experiencing significant outflows as investors shift capital towards international equities, with only two weeks of positive inflows recorded in 2026 [1][2] - Total assets in US Bitcoin ETFs have decreased from approximately $115 billion to around $83 billion, while Ethereum ETFs have seen a decline from about $18 billion to near $11 billion, indicating a clear trend of capital leaving the crypto asset class [2] - International equity ETFs have recorded their strongest inflows in years, with January seeing record allocations into global ex-US funds, which absorbed roughly one-third of total ETF inflows [3] Market Dynamics - The increase in US Treasury yields, driven by stronger jobs data, has made bonds more attractive compared to risk assets like Bitcoin and Ethereum, contributing to a structural headwind for these cryptocurrencies [4] - The shift in capital from crowded US growth trades, including crypto, to cheaper overseas markets is indicative of a major rotation among institutional investors [3] - The current outflows from crypto ETFs are reversing the previous demand dynamics, where ETFs acted as a source of demand, now functioning as distribution channels [7] Future Outlook - While the long-term thesis for cryptocurrencies remains intact, the short-term liquidity environment is weakened due to ongoing ETF outflows [8] - Continued capital rotation and challenging macro conditions may persist, potentially exerting further pressure on Bitcoin, Ethereum, and the broader crypto market [9]