The Great Crypto Rotation: XRP and Solana ETFs Win Institutional Dollars as Bitcoin and Ethereum Bleed $521 Million

Something unusual is happening in the institutional crypto market. While Bitcoin and Ethereum—the two largest digital assets by market capitalization—hemorrhaged capital last week, their smaller rivals attracted steady inflows. The divergence signals what some analysts are calling a potential paradigm shift in how large investors allocate to digital assets.

According to CoinShares data released January 12, digital asset investment products saw $454 million in net outflows for the week ending January 10, reversing much of the $1.5 billion in gains recorded during the first week of 2026. But beneath that headline number lies a more nuanced story.

The Great Rotation in Numbers

Bitcoin led the exodus with $405 million in outflows, while Ethereum followed with $116 million flowing out of related products. Together, the two dominant cryptocurrencies saw over $521 million leave their investment vehicles in a single week.

Yet in that same period:

• XRP attracted $45.8 million in fresh capital
• Solana brought in $32.8 million
• Sui, a newer layer-1 blockchain, gained $7.6 million

The numbers from spot ETF flows paint an even starker picture. From January 5 through January 9, Bitcoin spot ETFs experienced net withdrawals of $681 million, while Ethereum saw outflows of $68.57 million. Meanwhile, XRP spot ETFs gained $38.07 million and Solana spot ETFs attracted $41.08 million.

Why the Divergence?

Several factors appear to be driving the institutional rotation. First, delayed Federal Reserve rate cut expectations have dampened enthusiasm for Bitcoin, which has historically traded as a risk-on asset correlated with monetary policy expectations.

Second, the newer altcoin ETFs—particularly those tracking XRP and Solana—offer institutional investors exposure to different use cases. XRP's focus on cross-border payments and Solana's high-performance blockchain for decentralized applications represent distinct value propositions from Bitcoin's digital gold narrative or Ethereum's smart contract platform.

"For the time being, XRP and Solana are winning the institutional attention battle—at the expense of Bitcoin and Ethereum."

— CoinShares weekly analysis

Geographic Split

The outflows weren't uniform globally. The United States dominated the selling pressure with $569 million in outflows—reflecting perhaps the unique sensitivity of U.S. institutional investors to Fed policy signals.

In contrast, European investors appeared more bullish:

• Germany added $58.9 million
• Canada contributed $24.5 million in inflows
• Switzerland added $21 million

The geographic divergence suggests different regional appetites for crypto risk, with European institutions potentially viewing current prices as buying opportunities while their American counterparts reduce exposure.

Solana's Adoption Question

Despite the positive ETF flows, on-chain data reveals a more complicated picture for Solana. Network Growth indicators have continued to fall, signaling that adoption of the asset remains weak even as prices recover.

This disconnect—rising prices with falling network activity—historically suggests rallies may not be sustainable without fresh investor interest. The ETF inflows may be providing price support that masks underlying weakness in actual blockchain usage.

The 2026 Outlook

Asset manager Bitwise remains bullish despite the near-term turbulence, predicting that Bitcoin, Ethereum, and Solana will all hit new all-time highs in 2026. The firm argues the traditional four-year crypto cycle is fading, replaced by structural drivers including institutional adoption, spot ETF flows, and regulatory clarity.

If Bitwise is correct, the current rotation may represent tactical repositioning rather than a permanent shift away from the market leaders. Bitcoin and Ethereum still dominate total assets under management in crypto products by a wide margin.

What It Means for Investors

For those watching the crypto space, the institutional rotation raises important questions. Is this the beginning of a broader diversification away from Bitcoin dominance? Or merely profit-taking from 2025's winners being redeployed into assets with more upside potential?

The answer may depend on the Fed's next moves. Rate cut expectations—or their absence—will likely continue driving flows across all risk assets, including crypto. The correlation between monetary policy and digital asset prices shows no signs of weakening.

One thing is clear: the crypto investment landscape is maturing beyond simple "buy Bitcoin" mandates. Institutional investors are making increasingly nuanced allocation decisions across the digital asset ecosystem, and the days of Bitcoin being the only game in town appear numbered.