The crypto market is showing signs of cooling investor sentiment in early 2026, based on the latest data from CoinShares’ weekly digital asset fund flows report covering the week ending around January 10-12, 2026.
Digital asset investment products such as ETFs and ETPs from providers like Fidelity, Grayscale, and Ark recorded net outflows of approximately $454 million last week reports cite figures around $454M. This marks a sharp reversal:It followed strong early-year inflows of about $1.5 billion in the first few trading days of 2026.
A subsequent four-day streak of outflows totaled roughly $1.3 billion, nearly wiping out those initial gains. Bitcoin-linked products bore the brunt, with ~$405 million in redemptions. Ethereum saw ~$116 million in outflows. Smaller outflows hit multi-asset, Binance, and Aave products. Short-Bitcoin products also saw $9.2 million outflows, indicating reduced bearish leverage.
Regionally, the United States drove the negativity with ~$569 million in outflows, likely tied to fading hopes for a Federal Reserve interest rate cut in March. Hotter macro data resilient services, labor market, sticky inflation reduced expectations, prompting risk-off behavior. In contrast: Germany led inflows at ~$58.9 million.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026).
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab (class begins Jan 24 2026).
Canada ($24.5M) and Switzerland ($21M) also saw positive flows. Notably, some altcoins bucked the trend with inflows: XRP: ~$45.8 million. Solana: ~$32.8 million. Sui: ~$7.6 million. This suggests selective rotation rather than a full exit from crypto, with investors shifting toward certain altcoins amid caution on majors like BTC and ETH.
Separately, retail interest in crypto appears subdued. Viewership of cryptocurrency-related content on YouTube has dropped to its lowest levels since January 2021— early bear market phase post-2021 peak. Analysts and creators like Benjamin Cowen of ITC Crypto, Tom Crown, Jesus Martinez describe this as a prolonged “bear market” in social engagement since 2021, with no return to prior hype highs.
The decline accelerated over the past three months and spans platforms, not just YouTube or X. Factors cited include: Retail fatigue from scams, pump-and-dump schemes, and underwhelming returns e.g., BTC reportedly down ~7% in 2025 in some commentary. Shift toward macro assets/commodities that outperformed crypto in 2025.
Institutional dominance driving price action this cycle, with less retail FOMO. These trends align with a market where institutional flows via products remain significant but volatile, while retail participation via content consumption stays depressed—potentially signaling a quieter, more mature phase rather than broad abandonment.
AuM in these products hovered around $180-182 billion recently, down from peaks but still elevated historically. Keep an eye on macro updates (Fed signals) and any altcoin momentum for shifts.
This positive flow for XRP contributed to a selective rotation among altcoins, with similar inflows into Solana ($32.8M) and Sui ($7.6M), while majors like Bitcoin and Ethereum faced heavy redemptions. Cumulatively, XRP ETFs have seen inflows surge to around $1.3-1.4 billion in early 2026 alone, building on launches in late 2025 and driving strong trading volumes.
The introduction of spot XRP ETFs in late 2025 has been a primary catalyst, enabling easier institutional access and absorbing significant supply. These products have attracted consistent inflows, with recent daily additions ranging from $10-50 million, pushing cumulative figures toward $1.4 billion in just the first few weeks of 2026.
Institutions like BlackRock and Franklin Templeton are increasingly viewing XRP as a regulated wrapper for exposure to tokenized assets and cross-border efficiency, leading to rebalancing and portfolio allocations. This isn’t speculative; it’s driven by mandates for risk-managed diversification, with ETFs forcing buys on inflows and creating a “supply shock” as XRP is pulled from spot and OTC markets.
Analysts note that under-allocation to XRP is now seen as a risk, especially as competitors ramp up exposure. Post-SEC resolution in prior years, XRP has benefited from a clearer regulatory path, positioning it as a “safe” altcoin for institutions wary of enforcement risks.
Crypto-friendly U.S. policies under the current administration, including potential bank charters for Ripple, have further boosted confidence. This clarity has flipped sentiment bullish, with XRP framed as a “breakout trade” for 2026 due to its non-security status and alignment with global standards.
Broader macro liquidity expectations—tied to potential Fed easing and improved sentiment—have amplified this, drawing inflows even amid Q4 2025 dips. XRP’s core strength lies in its utility for cross-border payments via Ripple’s On-Demand Liquidity (ODL), which is expanding through new bank partnerships in Asia and Europe.
Investors are increasingly valuing this over pure speculation, with XRP positioned as a global exchange layer for faster, cheaper settlements. Upcoming XRPL upgrades in 2026—such as native lending, privacy features, and better programmability—are expected to enhance DeFi and tokenized asset capabilities, attracting more institutional flows.
Real-world asset (RWA) tokenization is a major driver, with XRPL as the “original RWA chain” drawing interest from giants like JPMorgan and SBI for building capabilities now. This utility narrative has led to steady demand, with inflows holding up better than peers during market stress.
Exchange balances for XRP are at multi-year (7-8 year) lows, creating supply tightness as institutions hoard via ETFs and lockups in DeFi. Circulating supply is shrinking while demand rises, amplified by everyday XRPL usage not directly impacting price as much as these lockups.
This has fueled a “supply shock” scenario, where inflows exacerbate upward pressure, especially as old and new whales including ETFs accumulate. Technical structures like ascending triangles and double bottoms on longer timeframes signal potential breakouts, drawing more capital.
Amid waning confidence in U.S. markets e.g., reduced Fed rate cut odds, capital is rotating from overexposed majors like BTC and ETH into undervalued altcoins like XRP for its “cheaper rails” and settlement efficiency. XRP is seen as a targeted alternative, outperforming in early 2026 with price gains of 25-30% in the first week, driven by renewed risk appetite and altcoin outperformance during BTC rallies.
Geopolitical factors e.g., Middle East tensions, oil supply disruptions are pushing institutions toward neutral, fast-settling assets like XRP for liquidity in stressed scenarios. This rotation is institutional-led, with XRP’s role in tokenized FX and DeFi making it a foundation for repricing.
Overall, these drivers reflect a maturing narrative for XRP: shifting from hype to fundamentals like utility, regulation, and institutional plumbing. While retail engagement remains low as seen in broader crypto content viewership dips, institutional flows could sustain momentum, potentially leading to parabolic growth if bank adoption accelerates in 2026.
Risks include macro reversals— persistent inflation or delays in XRPL upgrades, but current trends point to XRP as a standout in a volatile market.