The new year rally in cryptocurrency markets has hit a wall. U.S. spot Bitcoin exchange-traded funds have hemorrhaged roughly $1.1 billion over the past three trading days, nearly erasing the modest gains recorded at the start of 2026 and sending the Crypto Fear and Greed Index sliding toward bearish territory.

The Outflow Breakdown

The selling has been relentless. Data from SoSoValue shows daily net outflows of $398.95 million on January 8, following even heavier redemptions earlier in the week. Outflows peaked at $486.08 million on January 7—one of the largest single-day exits since spot Bitcoin ETFs launched in January 2024.

Even the biggest names in the space aren't immune. BlackRock's iShares Bitcoin Trust (IBIT), the largest spot Bitcoin ETF with over $50 billion in assets, recorded $193.34 million in outflows in a single session—a stark reversal from the steady inflows that characterized much of 2025.

Total Bitcoin under management across U.S. spot ETFs now stands at $118 billion, down from peaks above $125 billion reached in late 2025.

Fear and Greed: The Sentiment Shift

The outflows have taken a measurable toll on market sentiment. The Crypto Fear and Greed Index dropped from 49 to 43 in just 24 hours, sliding from neutral territory toward the fear zone.

This marks a significant deterioration from the "greed" readings that dominated in late 2024 when Bitcoin surged to its all-time high of approximately $126,000. The index now sits firmly in cautious territory, reflecting investor uncertainty rather than the speculative optimism that drove last year's rally.

What's Driving the Selling?

Several factors have converged to sour sentiment:

  • Macroeconomic uncertainty: Friday's jobs report reinforced expectations that the Federal Reserve will hold rates steady through at least January, removing one potential catalyst for risk assets.
  • Geopolitical concerns: Ongoing tensions related to U.S. foreign policy, including the Venezuela situation, have injected volatility across markets.
  • Technical selling: Bitcoin's break below $90,000—a key psychological support level—triggered stop-losses and accelerated the selling pressure.
  • Profit-taking: After Bitcoin's 2024-2025 bull run that saw prices more than double from cycle lows, some investors are locking in gains.

The Price Impact

Bitcoin has retreated from its early-January levels above $94,000 to trade near $90,000—a roughly 4% decline. While that might seem modest compared to crypto's notorious volatility, the move carries weight given the scale of institutional money now in the market.

Ethereum has fared worse, dropping more than 4% to trade around $3,100. The broader crypto market cap contracted by 3.1% to $3.1 trillion, according to CoinGecko data.

The Bull Case Remains Intact

Despite the near-term pain, several analysts remain constructive on crypto's 2026 outlook.

Bernstein analysts declared this week that "Bitcoin and broader crypto markets have bottomed," pointing to the stabilization in prices following the Q4 2025 correction. The firm maintains a $150,000 Bitcoin price target for 2026.

BlackRock's Jay Jacobs echoed the long-term bull case, noting that despite two years of spot Bitcoin ETFs trading on U.S. exchanges, "We see this still being very early days for bitcoin and ethereum."

Fundstrat's Tom Lee: "Crypto Has Not Peaked"

Fundstrat's Tom Lee, one of Wall Street's most prominent Bitcoin bulls, argues the selloff presents an opportunity. "Crypto has not peaked," Lee said earlier this month, predicting a January breakout and calling Ethereum's current setup the beginning of a "supercycle."

What to Watch Next

The coming week brings several catalysts that could determine whether the selling intensifies or subsides:

  • December CPI (Tuesday): A hotter-than-expected inflation reading could push the Fed further toward holding rates, potentially pressuring risk assets including crypto.
  • Bank earnings: Major financial institutions reporting this week could provide color on institutional crypto appetite.
  • Supreme Court tariff ruling: A decision expected by January 14 could inject fresh volatility across markets.

The Bottom Line

The $1.1 billion outflow from Bitcoin ETFs serves as a reminder that institutional adoption cuts both ways. The same vehicles that channeled billions into crypto during the bull market can just as easily facilitate rapid exits when sentiment sours.

For long-term believers, the current weakness may represent an attractive entry point. But for traders, the Fear and Greed Index's slide toward fear territory suggests caution is warranted until clearer signs of stabilization emerge.

Bitcoin's path from here likely depends less on crypto-specific factors and more on the broader macro environment. If inflation continues cooling and the Fed eventually resumes rate cuts, risk assets should benefit. But until that picture clarifies, volatility is likely to remain elevated.