The digital asset market has kicked off 2026 with a significant resurgence, exhibiting what many are calling the "January Effect." Following a challenging end to 2025 that saw over $6 billion in institutional outflows, the new year has ushered in a renewed appetite for Bitcoin and Ethereum, particularly through their respective US-based Spot Exchange-Traded Funds. This swift turnaround hints at a potential recovery and a shifting sentiment in the broader crypto landscape.
Institutional Inflows Drive Digital Asset Rebound
The second trading day of January 2026 marked a stunning reversal, with US-based Spot Bitcoin and Ethereum ETFs collectively attracting a massive $645.8 million in net inflows. This impressive figure signals a strong return of institutional interest, effectively counteracting the outflows observed in November and December. Specifically, Bitcoin ETFs recorded their largest net inflow in 35 trading days, with BlackRock’s IBIT leading the charge by absorbing $287.4 million of the total $471.3 million into BTC funds. Meanwhile, Spot Ethereum ETFs experienced their most substantial single-day inflow in 15 trading days, with Grayscale’s ETHE surprisingly topping the list for Ether inflows at $53.7 million.
Price Action and Future Outlook
Despite the recent surge in institutional investment, both Bitcoin and Ether prices had remained relatively stagnant over the preceding 30 days, a lingering effect of a major liquidation event in October 2025 that wiped out nearly $20 billion in value. However, the fresh wave of January inflows appears to have immediate positive effects on prices. Bitcoin reclaimed the $91,337.49 level, registering a 1.87% gain in 24 hours, while Ethereum surpassed $3,140.08 with a 1.51% increase. This powerful start to the year raises a critical question for investors: does this day-one surge signify the beginning of a new bull cycle for 2026? While caution remains due to past volatility, the accelerating institutional demand suggests that the worst structural damage may be behind the market, potentially setting the stage for new all-time highs for both BTC and ETH.
