Liquidity Paradox: Credit Markets Hit Record Health While Bitcoin Starves

Bitcoin’s aggressive uptrend at the start of 2026 has slowed, triggering a liquidation spree and net outflows of $243 million from U.S. spot Bitcoin exchange-traded funds on Tuesday. The flows were mixed, with BlackRock’s IBIT seeing $228 million in inflows, offset by outflows from several major issuers. Fidelity's FBTC led redemptions at -$312 million, followed by Grayscale’s GBTC (-$83 million) according to reports.

Pluto Financial Technologies has raised $8.6 million in equity and secured hundreds of millions in lending capacity. The company aims to transform illiquid private market assets into instant financial flexibility. The AI-powered platform is supported by institutional balance sheet partners, including Apollo and Hamilton Lane as detailed in their announcement.

US spot Bitcoin ETFs have experienced explosive growth at the start of 2026, attracting over $1.2 billion in the first two trading days of the year. This surge in inflows has led analysts to project that Bitcoin ETFs could see annual inflows of up to $150 billion if this pace continues.

Why Did This Happen?

The recent ETF outflows look temporary rather than structural, according to Sergey Kravtsov, Co-founder & CEO at Papaya Finance. He attributes the shift to tactical repositioning driven by short-term price action. Illia Otychenko, Lead Analyst at CEX.IO, noted that late 2025 selling pressure from tax-loss harvesting has eased, but as Bitcoin consolidates, ETF flows could look more chaotic in the short term.

Meanwhile, spot Ethereum and Solana ETFs noted inflows of $114.74 million and $19.12 million, respectively. This relative strength underscores the selective nature of the pullback. Digital Asset Trust inflows have moderated according to DeFiLlama data, but this reflects caution rather than disengagement.

What Are Analysts Watching Next?

Vincent Liu, CIO of Kronos Research, described the outflows as more like post-inflow normalization rather than risk-off. Institutions are rebalancing exposure, not exiting conviction. Liu also pointed out that bitcoin’s price held steady despite the sizable outflows, suggesting it is undergoing consolidation rather than capitulation.

Analysts are also watching the potential impact of the upcoming Supreme Court ruling on Trump-era tariffs. Prediction markets give the government only a 23% to 30% chance of winning the case, which could have significant economic implications. The ruling is expected to clarify whether the tariffs were lawfully imposed under emergency powers.

How Might This Affect Future Market Trends?

Bitcoin ETFs are starting 2026 with strength and growing institutional backing. Morgan Stanley’s entry into the market could significantly broaden access to crypto ETFs, reinforcing their legitimacy as a mainstream investment vehicle. Eric Balchunas, senior ETF analyst at Bloomberg, estimates that Bitcoin ETF inflows in 2026 could land anywhere between $20 billion and $70 billion, largely hinging on price action.

Pluto’s Wealth Equity Line of Credit (WELOC) is designed to let investors borrow against private market assets at competitive rates, with repayment from future fund distributions and no monthly interest payments. Through partners like Allocate and Moonfare, Pluto provides access to thousands of investors managing over $6 billion in alternative assets.

Bitcoin’s price action and ETF inflows are closely watched by investors and analysts. If the price pushes toward the $130,000–$140,000 range, stronger inflows could follow. Meanwhile, the impact of the Supreme Court ruling on the broader market remains a key variable.