Crypto investment products recorded sharp outflows last week as optimism around an early Federal Reserve interest rate cut began to fade. According to data from CoinShares, crypto exchange-traded products (ETPs) saw $454 million in net withdrawals, reversing part of the strong inflows that marked the start of 2026.
The sell-off followed a brief rally that saw $1.5 billion in inflows during the first two trading days of the year. A four-day stretch of withdrawals quickly erased much of that momentum, highlighting how sensitive the crypto market remains to macroeconomic signals.
Fed Policy Uncertainty Drives Investor Caution
CoinShares attributed the shift in sentiment largely to growing doubts about a near-term interest rate cut by the Federal Reserve. Recent macroeconomic data reduced expectations of a March rate cut, prompting investors to scale back risk exposure.
James Butterfill, head of research at CoinShares, noted that weakening confidence in monetary easing has been a key factor behind the renewed outflows. Despite the pullback, month-to-date flows remained positive at $229 million, following $582 million in inflows the previous week.
Bitcoin Dominates Outflows as Altcoins Show Resilience
Bitcoin led the downturn, recording $405 million in outflows and driving most of the negative sentiment across crypto ETPs. Short-Bitcoin products also saw modest withdrawals of $9 million, suggesting mixed positioning rather than a clear bearish consensus.
In contrast, several major altcoins continued to attract capital. Funds linked to XRP, Solana, and Sui posted combined inflows, with XRP leading at $46 million, followed by Solana at $33 million and Sui at $8 million. Ethereum products, however, were not spared, registering $116 million in outflows, while multi-asset altcoin funds saw an additional $21 million exit the market.
United States Bears the Brunt of Withdrawals
From a regional perspective, the United States stood out as the only market with significant negative flows. US-based crypto investment products recorded $569 million in outflows over the week.
Elsewhere, sentiment remained more constructive. Germany attracted $59 million in inflows, while Canada and Switzerland added $25 million and $21 million, respectively, underscoring diverging regional investor behavior.
Asset Managers Show Split Performance
Total assets under management (AUM) across crypto ETPs edged higher to $181.9 billion by week’s end, up slightly from $181.3 billion the previous week.
Among issuers, BlackRock’s iShares products and Profunds Group led inflows with $181 million and $180 million, respectively. On the other side, Fidelity Investments and Grayscale Investments saw the largest outflows, posting $454 million and $360 million.
Market Outlook Remains Data-Dependent
While last week’s crypto fund outflows signal renewed caution, overall flows for January remain in positive territory. With inflation data and central bank guidance still in focus, crypto market sentiment is likely to remain closely tied to expectations around US monetary policy and interest rate decisions in the weeks ahead.
