Key Insights
- •Digital asset investment products recorded $2.17 billion in weekly inflows, the largest since October 10.
- •Bitcoin ETFs experienced outflows totaling $394.7 million on Friday, January 16, amidst tariff threats and delays to the CLARITY Act.
- •Solana ETFs registered their first-ever daily outflows at $2.2 million following a period of sustained institutional demand.
Digital Asset Investment Products Record Significant Inflows
Digital asset investment products recorded inflows of $2.17 billion last week, marking the largest weekly total since October 10. This surge occurred just ahead of a notable crypto market downturn.
According to CoinShares' report on January 19, Bitcoin represented the largest portion of asset-level flows, attracting $1.55 billion in weekly inflows. Month-to-date data indicated that Bitcoin had accumulated $1.66 billion by mid-January.
Ethereum followed with $496 million in weekly inflows. This occurred despite proposals under the CLARITY Act that could potentially restrict stablecoins from offering yield. Month-to-date flows for Ethereum reached $553 million.
Solana recorded $45.5 million in weekly inflows, bringing its month-to-date total to $75.8 million. XRP attracted $69.5 million for the week and $108.1 million month-to-date.
In other digital assets, Sui recorded $5.7 million, LIDO $3.7 million, and Hedera $2.6 million in weekly inflows.
US Leads Regional Flows Amidst Market Volatility
The crypto market sentiment was broadly distributed across regions, with the United States leading in weekly inflows at $2.05 billion. Germany followed with $63.9 million, Switzerland recorded $41.6 million, Canada brought in $12.3 million, and the Netherlands added $6 million.
Blockchain equities also saw inflows totaling $72.6 million, demonstrating continued interest in the broader digital asset ecosystem.
While inflows were stronger earlier in the week, the crypto market sentiment shifted negatively on Friday, January 16. This resulted in outflows of $378 million from Bitcoin, Ethereum, XRP, and Solana ETPs traded in the US on that day.
This reversal followed an escalation in diplomatic tensions concerning Greenland and renewed threats of additional tariffs from the President Donald Trump administration.
According to Farside Investors, US Bitcoin ETFs experienced outflows of $394.7 million on Friday. Ethereum ETFs registered modest positive net flows of $4.7 million, significantly weaker than earlier in the week.
CoinGlass data indicated that Solana ETFs saw daily net outflows for the first time on January 16, with $2.2 million exiting the funds. XRP ETFs recorded $1.1 million in positive net flows, reflecting a pattern similar to Ethereum's technically positive but weak performance.
Sentiment was also impacted by suggestions that Kevin Hassett, a prominent policy dove and a leading contender for the next US Federal Reserve Chair, was likely to remain in his current role rather than assuming the chairmanship.
CLARITY Act Delay Fuels Policy Uncertainty and Liquidations
The initial price decline on Friday was attributed to developments in Washington rather than specific crypto market factors.
The Senate Banking Committee postponed its planned markup of the CLARITY Act after Coinbase withdrew its support and publicly criticized provisions that would block stablecoin rewards.
Prices softened during the day, but the narrative shifted over the weekend. The crypto market's policy clarity transitioned from a positive driver to a point of uncertainty, and leveraged positions became precarious, leading to thin liquidity.
The sell-off intensified over the weekend as fresh macroeconomic shocks impacted risk appetite.
President Trump's threat to escalate tariffs on several European countries in connection with the Greenland dispute triggered broader risk-off movements.
Crypto prices, which trade continuously, became an immediate channel for de-risking while traditional markets were closed during the holiday-thinned session.
Reports linked the price drop to a cascade of liquidations in derivatives, with approximately $875 million in leveraged positions being liquidated within a 24-hour period.
On January 19, the trend continued into Asian and European markets as tariff fears and demand for safe-haven assets strengthened. As of press time, Bitcoin was trading at $92,991.76, and the total crypto market capitalization had contracted by 2.6% over the preceding 24 hours.
Two Catalysts Impact Crypto Market Momentum
Two significant catalysts emerged from Friday to Monday, influencing the crypto market. Regulatory uncertainty stemming from the CLARITY Act's delay weakened the narrative that clear US regulations were imminent.
Subsequently, tariffs and trade conflicts negatively impacted sentiment. Forced liquidations then caused mechanical damage once prices began to slip. The crypto market liquidations amounted to hundreds of millions of dollars over a 24-hour period.
Month-to-date data through mid-January indicated total inflows of $2.4 billion, despite Friday's reversal.
This pattern suggested that institutional flows remained constructive. However, Friday's contraction demonstrated that macroeconomic and policy catalysts could rapidly reverse momentum when leverage had built up during periods of thin trading conditions.