January Exodus: ETFs Drain $46B in Six Days

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  • In six days, a record $46 billion vanished from US ETFs, a blunt pronouncement that the January rally was a comforting myth all along. The old whisper about “the January Effect” shuddered, and markets looked away with a shrug and a sigh. 😂
  • Inflation would not bow, and hopes for a kinder fate from the Fed dissolved like frost under sunlight. Across asset classes a quiet urgency grew: sell, sell, sell, as if courage itself had run out of stock. 🤨
  • Bitcoin and Ethereum ETFs bled, yet the oddball funds-XRP and Solana-still burned with a stubborn ember, a small light in a long corridor. 🔥

The opening weeks of the year landed with the thud of a door in a deserted corridor-grim, unadorned, and forever observed by those who pretend not to notice.

Usually the New Year carries the “January Effect”: money slides into the market on the back of optimism. This year, that optimism froze. US-listed ETFs shed $46 billion in six trading days, ending January 11, and the pace looked less like a rally and more like a confession.

This sudden exodus sits atop the record books as the most aggressive start-of-year liquidation in memory, and Wall Street stares, blinking, as if seeing risk for the first time.

Breaking the Historic ETF January Trend

January has long been a festival of hopeful calculations. Since 1950 the S&P 500 has risen in January more often than not; capital-fresh from year-end bonuses-was supposed to flood the gates. Yet the numbers scream a different, harsher truth: divergence with a stubborn edge.

Which held its value better since 2000, gold or stocks? Here’s how $10K in each performed 📈 This graphic, created in partnership with Visual Capitalist, shows how a $10K stake in gold and a $10K stake in the S&P 500 grew from January 2000 to October 2025…

Broad equity funds bore the brunt: Large-cap ETFs tracking the S&P 500 and Nasdaq-100 erased about $28.4 billion. Fixed income offered no sanctuary either: bond ETFs shed $9.2 billion, as investors fled to the certainty of cash. Emerging markets joined the retreat with $4.1 billion redemptions. This march of losses signals a shift toward “risk-off,” a mood more faithful to fear than to hope.

Inflation and the Federal Reserve Pivot

The principal driver is fatigue-macro fatigue-the sense that the machine will not, after all, rescue itself. Most analysts dreamt of a soft landing and predictable rate cuts in 2026. But on January 6 the latest inflation figures-core CPI at 3.4%-dashed those fantasies. The possibility of a March rate cut collapsed from 72% to a meager 14%.

ETFs have taken in $46b in the first 6 days of year, abnormally high to start year, on pace for $158b for month, about 4x the norm. Typically Jan is weak month bc sees tax loss harvest money leave (and it is -8b) that came in in Dec, but the industry is booming…

Smart money-the institutional kind-began withdrawing at once. Algorithms, those cold scribes of the market, issued sell orders across diversified portfolios in perfect synchrony. When the truth becomes obvious-that the Fed might not intervene-the most liquid things go first, as if liquid would run from a fire.

Crypto ETFs And The Panic

The digital realm felt the tremor as well. Crypto ETFs, once crowned as the unstoppable, could not escape the year’s chill. After a brief flirtation with a rally on January 2 and 5, the mood soured.

SoSoValue data shows US spot Bitcoin ETFs recording four straight days of net outflows-$681 million for the first full trading week. BlackRock’s IBIT fund posted its first major downward streak, losing $252 million on Friday, January 9; Fidelity’s FBTC suffered an even larger single-day loss of $312 million. Ethereum ETFs followed a similar route, losing $68.6 million over the week. The market fears did not spare even the most fashionable new assets. 🪙💸

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2026-01-12 22:45