The crypto fund recorded the highest outflows of the week since mid-November 2025, amounting to a total of 1.73 billion USD, as investor sentiment across the crypto market remains risk-averse, with three key factors explaining this withdrawal.
The size and extent of these withdrawals indicate that the market continues to struggle to restore confidence, amid macroeconomic uncertainty and waning discussions about the role of crypto as a hedge.
Crypto outflows hit 1.73 billion USD last week, what you should know.
According to a recent report from CoinShares, there was overwhelming selling in the United States, with outflows amounting to nearly 1.8 billion USD in total.
At the asset level, withdrawals occurred widely, with Bitcoin leading the outflows valued at 1.09 billion USD.
Notably, this marks the largest outflow of Bitcoin products since mid-November 2025, indicating that confidence has not yet recovered from the severe price volatility in October.
Short-Bitcoin investment products saw a slight inflow of 0.5 million USD, but such imbalanced situations reflect a hedging allocation rather than confident bearish bets.
Ethereum followed next with an outflow of 630 million USD, while XRP saw a lighter outflow of just 18.2 million USD from investment products.
Together, this data reflects that selling pressure is not limited to just one narrative or one token, but reflects a rebalancing of crypto holdings across various portfolios. However, there are still some interesting exceptions.
Solana diverged from this trend with an inflow of 17.1 million USD, while others experienced slight inflows, particularly Binance (4.6 million USD) and Chainlink (3.8 million USD), according to some parts of this report. Read more.
These distributions show that there are still parts of the market that are of interest, especially among investors looking for strength relative to each other or specific catalysts in the ecosystem of those assets.
Three main drivers shape investor behavior.
Additionally, the capital flow in crypto last week marked a complete change from what the market saw in the week ending January 17. According to a report by BeInCrypto, crypto funds had an inflow of up to 2.17 billion USD, with Bitcoin leading.
In this context, James Butterfill, head of research at CoinShares, highlighted three key fundamentals affecting crypto outflows.
Expectations regarding interest rate reductions have decreased.
The first factor is expectations for lower interest rates, which have diminished support for the most significant crypto market drivers from the macro perspective. Data from the CME FedWatch Tool indicates that the market assesses the probability that the Fed will lower rates at only 2.8%.
With the timeline for relaxing monetary policy being pushed back, speculative assets, including digital assets, face increasing pressure, particularly from institutional investors sensitive to real returns and liquidity.
Price momentum is declining.
Secondly, negative price momentum continues to support the downward market trend. The inability of major coins to recover and establish a sustained upward trend since the price correction in October 2025 has caused trend-focused strategies and risk management to remain on the sidelines.
The market atmosphere, still filled with concerns about this downward trend, results in outflows from the crypto market every time it faces a vulnerable period.
Crypto has yet to capitalize on the currency depreciation trend.
Thirdly, Butterfill pointed out that there is increasing disappointment regarding the inability of digital assets to truly play a role in mitigating currency depreciation.
Despite an ongoing budget deficit, increased U.S. government borrowing, and concerns about long-term currency depreciation, crypto has not yet firmly established its position as a hedge against currency devaluation.
Butterfill noted that this has led some investors to begin questioning the role of crypto in short-term investment portfolios that seek diversification.
Expectations for lower interest rates, negative price momentum, and disappointment that digital assets are not participating in this currency depreciation trend are all likely to drive the aforementioned outflows, the CoinShares executives wrote.
In summary, the recent outflow of funds reflects that the market continues to search for new catalysts, and as long as macroeconomic expectations remain unchanged, price momentum is unstable, or crypto has not yet demonstrated an important role in the bigger picture, crypto funds may continue to face pressure.
