Bitcoin and Ethereum Take a Hit as Crypto Fund Outflows Reach $2.9 Billion
CoinShares, a major European digital asset manager, recently published a significant report detailing the largest weekly outflows of crypto asset investment products on record.
The data reveals that over $2.9 billion was withdrawn within the past week, pushing the three-week outflow total to $3.8 billion. This marks a sharp contrast to the prior 19-week inflow streak, which had attracted $29 billion into the market.
Bitcoin Leads the Outflows, While Altcoins See Mixed Performance
According to the report from CoinShares, Bitcoin bore the brunt of the weakened market sentiment last week, accounting for $2.59 billion of the total outflows.
While short Bitcoin products did see minor inflows of $2.3 million, the overwhelming trend was one of divestment. Ethereum also suffered, recording its highest-ever weekly outflows at $300 million.
Other major altcoins, including Solana and Ton, experienced notable withdrawals of $7.4 million and $22.6 million respectively. Interestingly, amid the largely negative sentiment, a few assets managed to shine.
Sui for instance emerged as the top performer, drawing $15.5 million in inflows, while XRP followed with $5 million in fresh investments.
Despite these exceptions, the overall picture remains one of caution and reduced appetite for digital asset products. Even blockchain equities were not immune, experiencing outflows of $25.3 million during the past week.
Reason Behind The Fund Outflows
According to James Butterfill, Head of Research at CoinShares, several factors contributed to the outflows, including the fallout from the Bybit hack, a more aggressive stance from the Federal Reserve, and the natural profit-taking that tends to occur after sustained inflow periods.
These events combined to dampen sentiment and drive investors to liquidate holdings. Butterfill wrote:
We believe several factors contributed to this trend, including the recent Bybit hack, a more hawkish Federal Reserve, and the preceding 19-week inflow streak totalling US$29bn. These elements likely led to a mix of profit-taking and weakened sentiment toward the asset class.
Meanwhile, the outflows were concentrated in several key regions. The United States led the charge with withdrawals of $2.87 billion, followed by Switzerland at $73 million and Canada at $16.9 million.
However, the report did highlight a bright spot: German investors bucked the trend, injecting $55.3 million in fresh capital as they sought to capitalize on the price weakness. This regional divergence highlights the varying approaches investors are taking in response to current market conditions.
Regardless of the outflows seen last week, Bitcoin and the rest of the crypto market has been able to see a noticeable recovery in value. So far, Bitcoin has reclaimed the $90,000 with its current price hovering above $92,000 marking an 8.7% increase in the past day.
This sudden surge from Bitcoin and the overall crypto market can be attributed to the US incoming crypto strategic reserve which was announced yesterday. According to President Donald Trump, this reserve would include BTC, ETH, SOL, XRP, ADA, and other major cryptocurrencies.
Featured image created with DALL-E, Chart from TradingView
Investors in the cryptocurrency market are currently feeling the impact of outflows, particularly affecting Bitcoin and Ethereum. The latest report from CoinShares indicates a decline in investments across digital assets, with a significant portion attributed to ongoing market volatility.
For the week ending recently, Bitcoin recorded an outflow of $13 million, marking its seventh consecutive week of negative sentiment. This extended trend highlights investor caution amidst regulatory scrutiny and macroeconomic factors that have caused uncertainty within the market.
Ethereum did not fare any better, facing an outflow of $5.5 million over the same period. The second-largest cryptocurrency by market capitalization has experienced a similar trend as investors reassess their positions in light of fluctuating market conditions and the potential impacts of Ethereum’s ongoing transition to a proof-of-stake system.
While Bitcoin and Ethereum continue to dominate the market landscape, other assets also reflected downward movement. Solana and Cardano drew modest outflows, albeit not as severe as those seen with Bitcoin and Ethereum. This suggests a focused shift in investor sentiment toward these larger cryptocurrencies, even amid a broader decline in the altcoin market.
The report details that total digital asset outflows reached $25.4 million over the past week, emphasizing the cautious approach many investors are taking in response to recent market dynamics. This downturn can be partially attributed to macroeconomic factors, including rising interest rates and persistent inflation fears that continue to loom large over risk assets.
Despite the negative outlook for Bitcoin and Ethereum, some analysts remain optimistic. They believe that the fundamental strengths of these leading cryptocurrencies could provide a solid foundation for future growth, particularly as long-term holders may view current prices as a buying opportunity.
In contrast, the overall sentiment within the cryptocurrency market remains volatile, compounded by the ever-evolving regulatory landscape. The United States continues to lead in cryptocurrency discussions, with proposed regulations prompting many investors to reconsider their involvement in the space. Meanwhile, institutions may adopt a more wait-and-see approach until clearer guidelines are established.
These developments signal a challenging environment for cryptocurrency investment, with both Bitcoin and Ethereum experiencing significant pressure. As the market adjusts to these new realities, investors will be watching closely to see if the tide can turn, ushering in a new wave of inflows or if outflows will persist in the near term.
