Institutional Backing Holds Steady While Bitcoin ETFs Face Weekly Redemptions

The crypto ETF market is sending mixed signals as we enter 2026. While spot Bitcoin ETF products experienced significant redemptions totaling $681 million during the first full trading week of the year, heavyweight financial institutions are simultaneously doubling down on digital asset infrastructure.

ETF Flows Shift Into Negative Territory

Bitcoin and Ether ETF redemptions painted a cautious picture mid-week. Starting from Tuesday, spot Bitcoin ETF products saw four consecutive days of net withdrawals, with Wednesday’s single-day outflow reaching $486 million—the largest pullback of the period. Thursday followed with $398.9 million in redemptions, and Friday added another $249.9 million. These outflows reversed the momentum from earlier in the week, when the products had captured $471.1 million on Jan. 2 and $697.2 million on Jan. 5.

Spot Ether ETFs mirrored this retreat, posting approximately $68.6 million in net redemptions for the week. Assets under management in Ether products settled near $18.7 billion by week’s end, reflecting the broader digital asset sector’s caution.

Macroeconomic Uncertainty Takes Center Stage

Market participants are recalibrating positions as fresh signals about monetary policy emerge. Investors are intensely tracking Federal Reserve statements and anticipating U.S. CPI data releases. Until economic headlines clarify the rate-cut trajectory, ETF inflows are likely to remain constrained. The pullback signals a tactical pause rather than structural distress—a distinction that matters for longer-term positioning.

Major Banks Signal Long-Term Confidence

Despite the near-term headwinds, institutional players are reinforcing their crypto bets. Morgan Stanley recently submitted SEC filings to establish spot Bitcoin and Solana ETFs, marking the first major U.S. bank to pursue both products simultaneously. Bank of America has also authorized its advisers to recommend select Bitcoin ETF options to qualifying clients. These moves underscore confidence in the durability of blockchain-based investment products even through periods of elevated volatility.

The Bigger Picture Remains Intact

Week-to-date outflows reached $952 million, yet month-to-date ETF flows remained positive at $588 million in late December. Zooming out further, crypto ETPs accumulated $46.7 billion throughout 2025, demonstrating persistent institutional demand beneath short-term fluctuations. The current pullback appears driven by tactical repositioning around macro catalysts rather than conviction shifts.

Bitcoin and Ether ETF trends will continue hinging on economic data releases and policy announcements. As clarity emerges on the inflation and rate outlook, renewed bullish momentum in ETF flows could quickly reverse recent redemption patterns.