ETF Rotations, Wallet Risks, Year End Flows

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Market Summary

Welcome back to Token Metrics Daily.

As of Dec 26, 2025, crypto markets are trading with a defensive tone into year end. Bitcoin hovers near $88,000, down roughly 30% from October highs. Ethereum remains under pressure as ETF redemptions persist. Across the ETF complex, 30 day net flows for BTC and ETH products are negative, with recent single day outflows topping $500M.

Flows show a clear rotation within regulated products. Investors are trimming BTC and ETH exposure while adding to select altcoin products, led by Solana and, to a lesser extent, XRP and a small basket of other names. This lines up with growing interest in higher beta assets that still sit inside familiar ETF wrappers.

Security is back in the spotlight after the Trust Wallet Chrome extension hack, reinforcing how much retail capital still rests in hot wallets and browser extensions. The incident is likely to intensify discussions around standards for wallet extensions, permissions, and key management.

Despite weak recent price action, the capital story is very different in regulated and private markets. For 2025, crypto ETFs saw roughly $34.1B of inflows, and multi-€ fintech megadeals in payments, custody, and crypto adjacent infrastructure continued to clear. The message: long term institutional interest in the asset class is intact, even as near term sentiment on majors cools.

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1. ETF Flows Flash Risk Off for BTC & ETH

Price tells part of the story. Flows tell the rest.

After a strong run into October, BTC has given back about 30%, now trading around $88K. ETF data show the same de risking. Over the last 30 days, BTC and ETH products have seen net outflows, with some days printing >$500M of redemptions across major issuers.

When ETF investors redeem shares, authorized participants have to unwind hedges in spot and futures. That selling adds pressure in a market already dealing with year end factors like tax optimization, balance sheet cleanup, and thin holiday liquidity on both CEXs and tradfi venues.

Several dynamics are likely in play:

• Profit taking after a big run: Long only allocators who bought early in the ETF cycle are trimming winners and resetting allocations into year end.
• Rotation, not full exit: Some capital is staying within the crypto ETF complex but shifting from BTC/ETH to higher beta altcoin products.
• Macro cross currents: Shifts in global rates, equity volatility, and FX drive systematic flows that treat BTC and ETH as a single macro factor bucket.

For investors, this setup means BTC and ETH price action is increasingly dictated by ETF flows and hedging activity rather than purely on chain trends in the near term. Watching daily flow prints, options skews, and futures basis can provide a cleaner read on positioning than price alone.

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2. Altcoin ETFs Pick Up the Baton

While majors leak, select altcoins are quietly gaining ground inside the ETF wrapper.

Solana products are seeing the strongest inflows in the current rotation, followed by XRP and a small group of other altcoin funds. In dollar terms, these vehicles are still much smaller than BTC and ETH ETFs, but the direction of travel matters:

• Flows into Solana ETFs suggest investors still want crypto beta, just with higher upside potential than the crowded majors.
• XRP and other alt ETFs provide diversification for allocators that want regulated exposure beyond BTC/ETH without onboarding to new CEXs or DEXs.
• The rotation lines up with on chain narratives such as TVL growth, DeFi and NFT activity, and improvements in user experience on alternative L1s.

This flow trend doesn’t guarantee outperformance, but it does change how risk is distributed across the market. When ETF allocators buy alt products, liquidity and derivatives infrastructure tend to follow. That can tighten spreads, deepen perps markets, and create more tools for both hedging and leverage around those ecosystems.

For portfolio construction, the message is less about chasing any single ticker and more about recognizing that crypto beta is fragmenting. BTC dominance can stay high in absolute terms while relative flows shift toward ecosystems where developers, TVL, and usage metrics are accelerating.

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3. Trust Wallet Chrome Extension Hack Highlights Wallet Risks

The recent Trust Wallet Chrome extension hack is another reminder that, for most retail users, the browser is effectively their custodian. When a wallet extension is compromised, the attack surface includes every DApp connection, every signature, and every token approval.

Incidents like this typically involve malicious code, phishing, or abused permissions, and they can result in funds being drained from hot wallets with little recourse. Even without exact loss figures, the pattern is familiar: attackers target the tools that sit between users and the chain—extensions, RPCs, and front ends—rather than base layer cryptography.

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4. Private Capital Backs Crypto Infrastructure

While liquid tokens grind lower, private markets tell a different story.

Across 2025, crypto related ETFs attracted about $34.1B of inflows globally. At the same time, multi-€ fintech and crypto infrastructure megadeals continued to close, especially in areas like custody, on-/off ramps, stablecoin payments, and compliance tooling.

Where is capital concentrating?

• Infrastructure and middleware: Scaling solutions, data providers, index oracles, and cross chain messaging that power activity across L1s and L2s.
• Regulated access points: Brokerages, neobanks, and payment processors that integrate crypto rails while staying inside existing regulatory frameworks.
• Enterprise and RWA: Tokenization platforms, on chain credit, and treasury tools that connect tradfi balance sheets to permissioned DeFi and stablecoin infrastructure.

This “picks and-shovels” focus contrasts with the more speculative rotation happening in public markets. It suggests that large pools of capital still believe in the long term growth of on chain finance, even if near term price action is choppy.

For token investors, infrastructure funding cycles matter. Projects sitting at the intersection of these themes—L2s with strong enterprise hooks, data layers tied to real usage, DeFi protocols with sustainable fee flows and competitive APY—are more likely to benefit from the next wave of integrations, listings, and liquidity support.

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Outlook

Heading into early 2026, the key variables to watch are clear.

On the macro side, the balance between ETF flows and on chain activity will likely dictate how quickly BTC and ETH can find firmer footing. Persistent redemptions would keep pressure on majors, while stabilization—or a shift back to net inflows—could quickly change the tone.

Within the altcoin complex, the question is whether current ETF rotation is a short lived search for performance or the start of a more durable regime where multiple L1s, L2s, and application sectors share the spotlight. TVL trends, user growth, and real fee generation across DeFi, gaming, and RWAs will separate narratives from fundamentals.

Security will stay front and center. Wallet extensions, bridge infrastructure, and key management practices are likely to see higher scrutiny from both users and regulators after the latest wallet related exploit. Teams that treat security as a core product feature, not an afterthought, will have an edge in winning and keeping capital.

Finally, despite recent drawdowns, the scale of ETF inflows and private market funding points to a long term trajectory where crypto is increasingly embedded in global markets and payment rails. For disciplined investors, that backdrop favors systematic frameworks, risk aware sizing, and a clear separation between long term conviction and short term trading.

This content is for informational purposes only and does not constitute financial, investment, or trading advice.

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