- Investors pulled a record $46 billion from US ETFs in just six days, breaking the traditional “January Effect” rally.
- Stubborn inflation and fading hopes for Federal Reserve rate cuts triggered a massive “sell-everything” move across all asset classes.
- While Bitcoin and Ethereum ETFs saw heavy outflows, specialised funds like XRP and Solana bucked the trend with steady growth.
The first weeks of the year have delivered a serious shock to the international financial system.
Usually, New Year’s brings the “January Effect,” where money floods into the market. This year, however, the opposite happened. Investors pulled $46 billion from US-listed ETFs in just six trading days ending January 11.
This massive exit now stands as the most aggressive start-of-year liquidation in history. This ETF January trend has also caught Wall Street off guard, indicating a major change in how people view risk.
Breaking the Historic ETF January Trend
Historically, January is a time of high optimism for traders. Since 1950, the S&P 500 has gained value in January more than 60% of the time.
Institutional managers usually deploy fresh capital from year-end bonuses during this window. However, the current data show a sharp divergence.
Which held its value better since 2000, gold or stocks? Here’s how $10K in each performed 📈
This graphic, created in partnership with @bullionvault, shows how a $10K stake in gold and a $10K stake in the S&P 500 grew from January 2000 to October 2025.https://t.co/ZfAx7g8XZL… pic.twitter.com/kQ9eGnuFRE
— Visual Capitalist (@VisualCap) November 10, 2025
Broad equity funds bore the brunt of the selling, and Large-cap ETFs tracking the S&P 500 and Nasdaq-100 lost a combined $28.4 billion.
Fixed income was not a haven either. Bond ETFs shed $9.2 billion as investors chose the ultimate safety of cash. Emerging markets also suffered with $4.1 billion in redemptions. This retreat shows that the ETF January trend is moving toward a “risk-off” environment.
Inflation and the Federal Reserve Pivot
The primary driver of this break in the trend is a sense of “macro-fatigue.” Most experts expected a “soft landing” and steady interest rate cuts in 2026.
However, fresh inflation data released on January 6 shattered those hopes. Core CPI remained at 3.4%, which was much higher than what the market wanted. Suddenly, the chance of a March rate cut fell from 72% to just 14%.
ETFs have taken in $46b in first 6 days of year, which is abnormally high to start year, on pace for $158b for month, about 4x the norm. Typically Jan is weak month bc $SPY sees a lot of tax loss harvest money leave (and it is -8b) that came in in Dec, but the industry is booming… pic.twitter.com/2QVOposBMf
— Eric Balchunas (@EricBalchunas) January 12, 2026
Institutional “smart money” also began to pull back immediately. Algorithmic trading models triggered sell orders across diversified portfolios simultaneously.
These massive outflows resulted from that change. When the markets realise the Federal Reserve isn’t coming to the rescue, the most liquid vehicles are often the first to be sold.
Crypto ETFs And The Panic
The digital asset sector felt the same heat. Crypto ETFs were very strong throughout last year, but they could not hide from the 2026 bloodbath. After a brief rally on January 2 and 5, the sentiment turned negative.
According to SoSoValue data, US spot Bitcoin ETFs recorded four straight days of net outflows. These withdrawals rose to $681 million for the first full trading week of the year.
BlackRock’s IBIT fund saw its first major streak of negative flows. It lost $252 million on Friday, January 9 alone. Fidelity’s FBTC fund also recorded an even larger single-day loss of $312 million.
Ethereum ETFs followed a similar path, losing $68.6 million over the week. This shows that even the most popular new assets are not immune to broader market fears.