Crypto funds recorded their largest weekly outflows since mid-November 2025, shedding a combined $1.73 billion. It came as investor sentiment across crypto markets remains firmly risk-off, with three factors explaining the retraction.
The scale and breadth of the withdrawals point to a market still struggling to regain confidence. This is amid stubborn macro uncertainty and fading narratives around crypto’s role as a hedge.
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Crypto Outflows Reached $1.73 Billion Last Week: What You Need to Know
According to the latest CoinShares report, the sell-off was overwhelmingly concentrated in the US, which accounted for nearly $1.8 billion of total outflows.
At the asset level, the retreat was broad-based, with Bitcoin leading the drawdown with $1.09 billion in outflows.
Notably, this was the largest outflow into Bitcoin products since mid-November 2025. It suggests that sentiment has yet to recover from the sharp price dislocation seen in October.
Short-Bitcoin investment products recorded small inflows of $0.5 million. Still, the imbalance suggests defensive positioning rather than a conviction-driven bearish bet.
Ethereum followed closely behind, posting $630 million in outflows, while XRP saw a more modest $18.2 million in outflows from investment products.
Together, the data signals that selling pressure is not isolated to a single narrative or token. Instead, it reflects a broader recalibration of crypto exposure across portfolios. There were, however, a few notable exceptions.
“Solana bucked this trend with inflows of $17.1 million, while others saw minor inflows, notably Binance ($4.6 million) and Chainlink ($3.8 million),” read an excerpt in the report.
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These allocations suggest that pockets of the market are still drawing interest, particularly among investors seeking relative strength or ecosystem-specific catalysts.
Three Core Forces Shaping Investor Behavior
Notably, the crypto fund flows last week mark a stark revision of what markets saw the week ending January 17. As BeInCrypto reported, crypto funds recorded inflows of up to $2.17 billion, with Bitcoin leading the fray.
Against this backdrop, James Butterfill, head of research at CoinShares, highlights three fundamental forces driving the crypto outflows.
- Dwindling expectations for interest rate cuts
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First, dwindling expectations for interest rate cuts have eroded one of crypto’s most important bullish macro tailwinds. Data on the CME FedWatch Tool shows markets pricing a meager 2.8% chance that the Fed will cut rates.
As markets push back the timeline for monetary easing, speculative assets, including digital assets, have faced renewed pressure, particularly from institutional allocators sensitive to real yields and liquidity conditions.
Second, negative price momentum continues to reinforce bearish positioning. The failure of major cryptos to establish sustained upside since the October 2025 drawdown has kept trend-following and risk-managed strategies on the sidelines.
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This overhanging bearish sentiment would amplify crypto outflows during every possible period of weakness.
- Crypto’s failure to capture the debasement trade
Third, Butterfill cites growing disappointment that digital assets have not yet participated in the debasement trade.
Despite persistent fiscal deficits, elevated government borrowing, and concerns about long-term currency dilution, crypto has so far failed to reclaim its narrative as a hedge against monetary debasement decisively.
According to Butterfill, this prompts some investors to question its near-term role in diversified portfolios.
“Dwindling expectations for interest rate cuts, negative price momentum, and disappointment that digital assets have not participated in the debasement trade yet have likely fueled these outflows,” the CoinShares executive wrote.
Taken together, the latest outflows reflect a market still searching for a catalyst. Until macro expectations shift, price momentum stabilizes, or crypto convincingly reasserts its macro relevance, crypto funds may remain under pressure.