Capital flows into cryptocurrency ETFs accelerate, with a clear divide between increased buying pressure on Bitcoin and Ethereum's stagnation in growth.

The cryptocurrency ETF market in mid-January is experiencing a major turning point. While inflows into spot Bitcoin and Ethereum ETFs continue mainly in the United States, the divergence between market bullish sentiment and actual price movements is becoming more apparent, leading to increased caution among investors.

Bitcoin Spot ETF Sees $14.16 Billion Net Inflows, Central to Market Liquidity

U.S. Bitcoin spot ETFs recorded a net inflow of $14.16 billion over four trading days last week, expanding total assets to $124.56 billion. This scale of inflow is a key indicator that crypto asset ETFs are becoming standard investment options for institutional investors.

The main inflows are concentrated in three funds: BlackRock’s iShares Bitcoin Trust (IBIT) with $10.34 billion, Fidelity’s FBTC with $1.94 billion, and Invesco’s BITB with $79.6 million, totaling over $13 billion. According to data from Farside Investors, nine funds are currently experiencing net inflows, confirming that capital is confidently flowing into Bitcoin spot ETFs across the market.

Since the start of the year through mid-January, cumulative net inflows have reached approximately $15 billion. Bloomberg ETF analyst Eric Balchunas commented, “The pace of inflows alone—$10 billion in just the past week—is evidence that buying pressure is steadily absorbing selling pressure in the market.”

Ethereum Spot ETF Gains $4.79 Billion, but Trails Bitcoin in Momentum

U.S. Ethereum spot ETFs also saw net inflows of $4.79 billion last week over five trading days, bringing total assets to $20.42 billion. However, the inflow scale is only about one-third of Bitcoin’s, clearly reflecting differing investor demand.

Most of the inflows are in Grayscale’s ETHE with $2.19 billion, with seven Ethereum spot ETFs experiencing net inflows. Data from Farside Investors shows that while individual holdings continue to see buying, the concentration of institutional money is lower compared to Bitcoin.

Despite implied volatility remaining high at 42.60%, the buy-sell ratio in Ethereum spot ETF options has reached 2.89, indicating short-term volatility is decreasing and market participants are maintaining a bullish outlook.

Hong Kong Market Stagnation and Chainlink’s New Listing Signal Diversification Efforts

Hong Kong’s Bitcoin spot ETF market has seen no capital inflow, with assets remaining at $3.64 million. Meanwhile, Jiahui Fund’s Bitcoin holdings decreased to 290.85 coins, while Huaxia Fund maintains 2,390 coins. The Hong Kong Ethereum spot ETF remains small-scale, with assets limited to $106 million.

Meanwhile, Bitwise’s Chainlink ETF (CLNK) has officially listed on the NYSE, making the U.S. Chainlink spot ETF a two-product lineup. On its first day of trading, it saw net inflows of $2.59 million, with a trading volume of $3.24 million and assets of $5.18 million. Including the Grayscale Chainlink Trust ETF, the total assets of Chainlink spot ETFs now amount to $95.87 million, with a historical cumulative net inflow of $66.38 million, indicating growing demand for new crypto asset ETFs.

At the same time, Defiance has announced the closure and liquidation of several leveraged long and yield-focused ETFs (ETHI, PLT, HOOI, SMCC, AMDU, HIMY, TRIL, LLYZ), reflecting ongoing market adjustments in high-risk products.

Regulatory Uncertainty by the SEC Spurs Cautious Market Stance

The U.S. Securities and Exchange Commission (SEC) has extended the review deadline for the proposed Canary Pudgy Penguins (PENGU) ETF on Cboe BZX and the T. Rowe Price Active Crypto ETF on NYSE Arca by up to 45 days, according to a federal notice. This suggests regulatory environment for crypto ETFs remains fluid.

Additionally, a political event—criminal investigations into Federal Reserve Chair Powell—briefly pushed Bitcoin above $92,000, but subsequent gains have been limited.

Divergence Between Price and Capital Flows Reflects Market Duality

Interestingly, Bitcoin spot ETFs have experienced a total net outflow of $13.8 billion over the past four trading days, indicating complex recent movements. The Bitcoin futures basis (annualized premium) remains around 5%, a neutral and somewhat bearish level, not signaling a full bullish reversal. Typically, in a bullish market, futures premiums exceed 10%, so current sentiment remains limited.

Despite Strategy’s recent $12.5 billion Bitcoin buy-in over the past month, the price has not clearly broken above $94,000, highlighting a gap between strong supply-side activity and cautious demand.

Matt Hougan, Chief Investment Officer at Bitwise, stated, “Bitcoin could follow a trajectory similar to gold in 2025. If ETFs continue to absorb new supply, driven by central bank demand, a scenario where Bitcoin surges 65% in 2025—similar to gold’s rally—becomes plausible,” emphasizing the importance of long-term ETF inflows.

Structural Significance and Challenges of the Crypto ETF Market

The acceleration of capital inflows into crypto ETFs reflects decreasing resistance among institutional investors to include cryptocurrencies in their portfolios. However, the weakening direct correlation between ETF inflows and price increases suggests market participants are becoming more cautious in asset valuation.

A key insight from comparing gold and Bitcoin is that assets supported by central bank buying often exhibit delayed price responses. Since its launch in January 2024, Bitcoin spot ETFs have absorbed over 100% of new supply, and the sustainability of this demand will be a crucial factor influencing long-term market direction.