Crypto Investment Products: $508M Weekly Outflows Amid Market Uncertainty

Crypto Investment Products See Significant Outflows as Market Sentiment Wavers

Investor caution took center stage last week as global crypto investment products recorded their second consecutive week of losses, with a staggering $508 million flowing out of various funds managed by industry giants such as BlackRock, Fidelity, Grayscale, Bitwise, ProShares, and 21Shares. The data, compiled by CoinShares, highlights the growing unease among investors, who appear to be grappling with concerns over trade tariffs, inflation, and monetary policy decisions following recent political developments.

“We believe investors are exercising caution following the U.S. Presidential inauguration and the consequent uncertainty around trade tariffs, inflation and monetary policy,” stated CoinShares’ Head of Research, James Butterfill. Supporting this perspective, trading turnover has seen a sharp decline, dropping from $22 billion two weeks ago to just $13 billion last week.

This latest downturn brings total net outflows over the past two weeks to $924 million, a stark contrast to the previous 18-week rally that saw $18 billion flood into the market. Geographically, U.S.-based funds bore the brunt of last week’s withdrawals, accounting for $560 million in outflows. Though other regions like Brazil, Canada, and Hong Kong also experienced moderate withdrawals, Europe stood out as an exception. Funds based in Germany, Switzerland, and Sweden bucked the trend, attracting net inflows of $30.5 million, $15.8 million, and $4.9 million, respectively.

Bitcoin Leads the Downtrend While Some Altcoins Defy Market Mood

The downbeat sentiment among investors was most evident in Bitcoin-related investment products, which led the weekly exodus with $571 million in net outflows. At the same time, short-bitcoin funds recorded net inflows of $2.8 million, indicating a growing number of investors betting against the cryptocurrency’s near-term performance. Despite experiencing fluctuations, Bitcoin remained relatively stable over the past week, slipping by just 0.3%.

The primary source of Bitcoin-related outflows came from the U.S. spot Bitcoin exchange-traded funds (ETFs), which saw $552.5 million leave their coffers last week. This suggests that investors are reassessing their positions in the world’s largest cryptocurrency, possibly in response to broader macroeconomic concerns.

Nevertheless, the picture was not entirely bleak, as certain altcoins managed to attract capital despite broader withdrawals. XRP emerged as the frontrunner among alternative assets, securing an impressive $38.3 million in net inflows. Since mid-November, XRP investment products have accumulated $819 million in net inflows, signaling investor optimism that the U.S. Securities and Exchange Commission may drop its lawsuit against Ripple.

Ethereum, Solana, and Sui-based investment products also saw modest inflows, adding $3.7 million, $8.9 million, and $1.5 million, respectively. These inflows came amid sharp price corrections, as XRP plunged 7.5%, Ethereum slipped 1.8%, Solana declined 13.7%, and Sui fell 0.7% over the past week.

While market uncertainty continues to weigh heavily on crypto investment products, the resilience of select altcoins hints at areas of investor confidence. Moving forward, macroeconomic developments and regulatory uncertainties will likely dictate investment flows, making the coming weeks crucial for the cryptocurrency market.