TLDR
- Bitcoin and Ethereum ETFs are seeing sustained outflows as capital moves to international markets.
- US investors reallocated funds into global ex-US equity ETFs in record numbers.
- Rising Treasury yields and macro conditions push investors out of crypto ETFs.
- Bitcoin and Ethereum ETFs have seen a significant drop in assets in 2026.
Over the past several weeks, Bitcoin and Ethereum exchange-traded funds (ETFs) in the US have experienced sustained outflows. These funds have seen significant declines in total assets, with the trend pointing to a major shift in investor behavior. Instead of reinforcing bullish momentum, the outflows from crypto ETFs are adding pressure to the broader cryptocurrency market. Meanwhile, international equity ETFs, particularly those outside of the US, have seen a substantial increase in inflows.
Outflows from US Bitcoin and Ethereum ETFs
Bitcoin and Ethereum ETFs in the US have experienced a noticeable downturn in assets since the start of 2026. Bitcoin ETF assets have fallen sharply from near $115 billion to approximately $83 billion, while Ethereum ETFs have seen an even steeper contraction, dropping from around $18 billion to $11 billion. This marks a clear shift, with institutional investors pulling capital out of US-based crypto assets in favor of international markets.
The reasons behind these outflows are linked to broader economic conditions, including rising Treasury yields and tightening liquidity. The US labor market’s strength has also played a role in shifting investor priorities toward safer assets, such as bonds. As Treasury yields climb, risk assets like Bitcoin and Ethereum become less attractive, prompting a rotation into international equities and safer, yield-generating investments.
Shift Toward International Equity Markets
While US-based Bitcoin and Ethereum ETFs are losing investor capital, international equity ETFs are seeing record levels of inflows. January 2026 saw an exceptional surge in global ex-US equity fund allocations, with these funds absorbing a large share of ETF inflows despite comprising a smaller portion of total ETF assets.
The shift towards international markets reflects a growing preference for equities in regions offering relatively cheaper valuations and improving macroeconomic conditions.
This growing interest in overseas markets highlights a significant rotation in institutional investor portfolios. As many investors trim their exposure to crowded US growth sectors, they are reallocating capital to international markets, where economic conditions are more favorable. The shift toward international equities also comes amid easing inflationary pressures in several markets outside the US, making these assets more appealing for investment.
Impact of Rising Treasury Yields on Crypto ETFs
The rise in US Treasury yields has been a central factor in the capital outflow from Bitcoin and Ethereum ETFs. Higher yields make safer, yield-generating investments more attractive compared to risk assets like cryptocurrencies. As the US economy shows signs of resilience, Treasury bonds, with their guaranteed returns, are drawing capital away from riskier assets like Bitcoin and Ethereum.
The high beta nature of Bitcoin and Ethereum means they are more sensitive to changes in financial conditions. When liquidity tightens and safer investments rise in value, assets like Bitcoin and Ethereum typically experience downward pressure. Investors, particularly institutional ones, are increasingly looking for more stable returns, pushing them to seek opportunities outside the crypto space.
Short-Term and Long-Term Outlook for Crypto ETFs
The capital outflows from Bitcoin and Ethereum ETFs do not necessarily reflect a long-term bearish outlook for cryptocurrencies. While short-term liquidity challenges may weigh on the performance of crypto assets, the fundamental outlook for the crypto market remains intact. However, until the rotation of capital slows or macroeconomic conditions improve, the pressure on Bitcoin and Ethereum ETFs is likely to persist.
In the short term, investors will likely continue to favor international equities and safer bonds. Over time, the crypto market may rebound as conditions change, but for now, the outflows from US crypto ETFs are a significant development to watch.
