The crypto market’s 2026 honeymoon lasted barely a week. After a hot start—$1.5 billion poured into digital-asset products in the first two days of January—investor sentiment flipped. Over four days last week, crypto funds recorded roughly $1.3 billion in outflows, wiping out nearly all of those early gains. By week’s end, net outflows stood at $454 million, according to CoinShares, signaling a sudden reassessment of risk among institutions. Why the rapid reversal? - Fed expectations cooled: Markets had priced in a Federal Reserve rate cut as early as March. Stronger-than-forecast economic data—resilient services activity and a stubbornly tight jobs market—pushed back those hopes. For institutional investors, that matters: higher rates keep the U.S. dollar strong and bond yields attractive, reducing the appeal of riskier assets like crypto. - Geopolitical noise: Rising uncertainty tied to Venezuela and broader U.S. foreign-policy concerns added another layer of risk, encouraging institutions to favor liquidity and capital preservation until clarity returns. Flows were concentrated in the U.S. The sell-off was not uniform globally. CoinShares data show the United States accounted for $569 million of last week’s outflows, the only region with negative flows. By contrast, Germany saw $58.9 million in inflows, Switzerland $21 million, and Canada $24.5 million—suggesting investors were reacting mainly to U.S. monetary policy rather than a worldwide pullback. Asset-level moves: selective rebalancing, not a mass exit - Bitcoin: $405 million in outflows (investors trimming exposure rather than positioning for a crash) - Ethereum: $116 million in outflows - XRP: $45.8 million inflows, buoyed by improving regulatory clarity - Solana: $32.8 million inflows, maintaining institutional interest - Sui: $7.6 million inflows, an emerging area of demand Market context and ETFs The broader market cap plunged about $120 billion last week. Prices at the close of the reporting period: BTC $92,330; ETH $3,137; SOL $141; XRP $2.06; SUI $1.80 (CoinMarketCap). Yet ETF demand shows pockets of confidence: Bitcoin ETFs recorded $116.7 million in inflows, while altcoin ETFs posted smaller gains—Ethereum ETFs $5.1 million, XRP ETFs $15.04 million, and Solana ETFs $10.8 million. Outlook Prices and flows suggest the market is reacting quickly to shifting Fed expectations. If Bitcoin holds above the ~$92,000 level and breaks through $94,000, momentum could return into February. But with interest-rate dynamics and geopolitical uncertainties still in play, institutions may keep reallocating defensively until monetary and geopolitical clarity improves. Note: Data cited are from CoinShares and price snapshots from CoinMarketCap. This summary is informational and not investment advice—crypto trading carries high risk; do your own research before making decisions. © 2026 AMBCrypto (original reporting). Read more AI-generated news on: undefined/news

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