Crypto funds experienced their largest weekly outflows since mid-November 2025, losing a total of 1.73 billion dollars. This occurred while market sentiment among investors remained clearly marked by risk aversion, with three factors explaining this withdrawal.

The scale and breadth of these withdrawals point to a market still struggling to regain trust. This occurs amid ongoing macroeconomic uncertainty and diminishing narratives about crypto's role as a hedge.

Outflows from crypto reached 1.73 billion dollars last week: here's what you need to know

According to the latest CoinShares report, the sell-offs were predominantly concentrated in the U.S., accounting for nearly 1.8 billion dollars of the total outflows.

At the asset level, the withdrawal was broadly distributed, with Bitcoin leading the way with outflows of 1.09 billion dollars.

It was particularly the largest outflow from Bitcoin products since mid-November 2025. This suggests that sentiment has not yet rebounded after the sharp price drop seen in October.

Short-Bitcoin investment products experienced smaller inflows of 0.5 million dollars. However, the ratio suggests a defensive positioning rather than a pronounced bearish bet.

Ethereum quickly followed with outflows of 630 million dollars, while XRP saw more modest outflows of 18.2 million dollars from investment products.

Together, the numbers show that the selling pressure is not limited to one narrative or one token. Instead, it reflects a broader reassessment of crypto exposure across portfolios. However, there were some notable exceptions.

"Solana went against the tide with inflows of 17.1 million dollars, while others experienced smaller inflows – particularly Binance (4.6 million dollars) and Chainlink (3.8 million dollars)," said an excerpt from the report.

These allocations suggest that certain parts of the market still attract interest, especially among investors seeking relative strength or specific catalysts in the ecosystem.

Three central forces shape investor behavior

It is worth noting that the crypto fund flows last week mark a significant shift from what the markets experienced in the week ending January 17. As BeInCrypto reported, crypto funds recorded inflows of up to 2.17 billion dollars, with Bitcoin leading the way.

In this context, James Butterfill, head of research at CoinShares, highlights three fundamental forces driving the outflows from crypto.

  • Falling expectations for interest rate cuts

Firstly, falling expectations for interest rate cuts have weakened one of crypto's key bullish macro-drivers. Data from the CME FedWatch Tool shows that markets are only assessing a 2.8% chance that the central bank will lower interest rates.

As markets push back expectations for easing monetary policy, speculative assets – including digital assets – have faced renewed pressure, particularly from institutional investors sensitive to real yields and liquidity conditions.

  • Negative price momentum

Secondly, negative price momentum has continued to strengthen bearish positioning. The fact that the largest cryptos have not been able to establish lasting increases since the price drop in October 2025 has led trend-based and risk-managed strategies to stay on the sidelines.

The persistent bearish sentiment will increase crypto outflows during all periods of weakness.

  • Crypto's failure to capture the “debasement trade”

Thirdly, Butterfill mentions a growing disappointment that digital assets have not yet participated in the debasement trade.

Despite a persistent budget deficit, rising government debt, and concerns about long-term currency dilution, cryptocurrency has not yet seriously regained its narrative as a hedge against monetary debasement.

According to Butterfill, this leads some investors to question crypto's role in the near future within broad portfolios.

"Falling expectations for interest rate cuts, negative price momentum, and disappointment that digital assets have not yet participated in the debasement trade have likely driven these outflows," wrote the CoinShares leader.

Overall, the latest outflows show that the market continues to seek a triggering factor. Until macroeconomic expectations change, price momentum stabilizes, or crypto clearly regains its relevance, crypto funds may remain under pressure.