Weekly Podcast for the First Week of January — Is the Rebound Just an Illusion? ETF Capital Outflows and Worsening Market Imbalance

[1] Introduction: Bitcoin breaks through $90,000, and the atmosphere is filled with calls of “Uptober” driven by quantitative algorithms. However, ETF funds are turning into net outflows, and liquidity is clearly flowing into derivatives.

‘Is this rebound based on genuine demand recovery, or is it a false impression caused by reallocation of liquidity?’ Exploring the essence of the rebound is the core focus of this week’s market analysis.

[2] Market Internal Analysis ① (Price·Asset Structure): Bitcoin(+1.91%) and Ethereum(+4.43%) are leading the market with strong performance, but this is accompanied by a relative increase in Ethereum’s share and a decrease in Bitcoin’s share. Altcoins are performing even more strongly. Dogecoin(+10.96%), Cardano(+8.91%), Ripple(+6.46%), etc., have surged far beyond Bitcoin. However, this rally is not driven by technological or ecological expansion; it is heavily influenced by leverage trading dominated by derivatives, which means it is not a structural diffusion but contains the possibility of short-term reversion.

In particular, the DeFi sector and some Meme coins have experienced a surge in trading volume(+29% and above), but the positions are highly biased, and on-chain demand recovery is weak. It is not a broad buying trend across all assets but a scenario where speculative funds are spreading into low-liquidity assets.

[3] Market Internal Analysis ② (Liquidity·Fund Flows): Trading volume of stablecoins(+80.02%) and derivatives trading volume of cryptocurrencies(+111.58%) have skyrocketed. This suggests that, compared to traditional new capital inflows, more is about existing investors increasing leverage and betting on volatility. ETF funds have net inflows of $317.7 billion within 2025, but recently, on a daily basis, they have again turned into large-scale outflows (BTC ETF -$348 million, ETH ETF -$72 million).

Glassnode data shows that the 30-day average ETF capital inflow has turned negative, which is noteworthy. The confidence in the market is cooling, and the possibility of a long-term net buy-in being interrupted is increasing. This may structurally limit the sustainability of the rebound.

[4] Macroeconomic Variables or Policy Environment: The Federal Reserve has started rate cuts and reinitiated small-scale quantitative easing (cmd style), but weak employment indicators (ADP employment -32,000) and uncertainties under the government shutdown remain. Although the market has already priced in an 88% probability of further rate cuts in October and December, actual liquidity is atypically spreading into ETFs, bonds, high-dividend funds, and other traditional assets.

Additionally, the U.S. Market Structure Act scheduled for review on January 15 (clarifying SEC/CFTC jurisdiction) may increase short-term institutional market entry uncertainty. It could lead to account tracking and disclosure obligations under the OECD cryptocurrency tax sharing framework (CARF), which is also a major uncertainty in the global institutional flow.

[5] Conclusion: This week’s market shows a “strong price, weak confidence” rebound. ETF outflows, concentrated liquidity, and the spread of speculative derivatives are undermining the durability of the rally. While a rebound exists, it cannot be regarded as a solid recovery structure.

Next week’s key variables are whether the U.S. government shutdown persists and the delay in labor data releases caused by it. This not only concerns the timing of rate cuts but may also serve as an important watershed for changes in market risk appetite. For the rebound to be effective, it needs to be accompanied by a recovery in ETF fund inflows, increased on-chain trading, and inflows into DeFi and stablecoins. Close attention should be paid to these aspects to assess the depth and sustainability of the rebound.