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Spot Bitcoin exchange-traded funds recorded $681 million in net outflows during the first full trading week of 2026. Cointelegraph reported that the products experienced four consecutive days of redemptions between Tuesday and Friday.

The largest single-day withdrawal occurred on Wednesday, when investors pulled $486 million from Bitcoin ETFs. Outflows continued Thursday with $398.9 million and Friday with $249.9 million, according to data from SoSoValue. These redemptions erased gains from the week's earlier sessions, when Bitcoin funds attracted $471.1 million on January 2 and $697.2 million on January 5.

Spot Ether ETFs followed a similar pattern. The products posted approximately $68.6 million in net outflows for the week. Total net assets for Ether ETFs stood at around $18.7 billion at week's end.

Vincent Liu, chief investment officer at Kronos Research, attributed the outflows to changing monetary policy expectations. Liu told reporters that diminished prospects for first-quarter rate cuts pushed traders into defensive positions. Geopolitical tensions added pressure as investors reduced exposure to risk assets.

The shift represents a reversal from 2025's performance. CryptoSlate reported that crypto exchange-traded products attracted $46.7 billion throughout 2025. Despite recent weekly outflows of $952 million, month-to-date flows remained positive at $588 million as of late December.

Bloomberg data showed BlackRock's IBIT ranked sixth among all ETFs for 2025 flows with $25.4 billion in inflows. The fund achieved this despite posting negative returns for the year. Investors appeared to use price weakness as an accumulation opportunity rather than a signal to exit.

Morgan Stanley filed with the Securities and Exchange Commission to launch two spot cryptocurrency ETFs. Bitcoin Magazine reported that the registration statements propose a Bitcoin Trust and a Solana Trust. The filing makes Morgan Stanley the first major US bank to seek approval for a spot Bitcoin ETF.

Bank of America took a parallel step by authorizing its wealth management advisers to recommend four Bitcoin ETFs to clients. The decision followed months of regulatory clarity under the current administration. These developments suggest institutional adoption continues despite short-term market volatility.

The infrastructure supporting digital asset adoption extends beyond ETF products. We recently documented that governments worldwide are exploring Bitcoin national reserves for strategic economic positioning. Nations view Bitcoin as a tool to reduce dependence on traditional payment systems and enhance financial autonomy.

Institutional demand data supports this trajectory. AInvest reported that 68% of institutional investors had invested or planned to invest in Bitcoin ETPs as of November 2025. The percentage rose to 86% when including all digital asset exposure. Bitcoin's market capitalization reached approximately $1.65 trillion in late 2025, representing nearly 65% of the global cryptocurrency market.

The current outflows may reflect tactical repositioning rather than a fundamental shift in institutional sentiment. Investors continue to monitor Federal Reserve guidance and Consumer Price Index data for signals about monetary policy direction. The ETF market remains liquid enough to accommodate both inflows and outflows without disrupting the broader adoption trend.