Investor Pullback Triggers $454M in Weekly Crypto Fund Outflows

TLDR

• Crypto investment products recorded $454 million in net outflows last week.
• Investor sentiment shifted due to reduced expectations of a Federal Reserve rate cut in March.
• Bitcoin funds led the withdrawals with $405 million in redemptions.
• Ethereum investment products saw $116 million in outflows during the same period.
• Multi-asset crypto funds recorded $21 million in net outflows.

Crypto funds experienced $454 million in net outflows last week as fading hopes of a March rate cut shifted sentiment, dragging digital asset investment products downward. Meanwhile, regional and asset-specific divergences influenced the weekly flows, according to CoinShares‘ latest report.

Bitcoin Drives Losses as Macro Outlook Shifts

Bitcoin investment products led the outflows, recording $405 million in redemptions, followed by short-BTC funds, which saw $9.2 million withdrawn. CoinShares’ James Butterfill said, “This turnaround in sentiment appears to stem mainly from investor worries over the diminishing prospects of a Federal Reserve interest rate cut in March.” Markets reacted to recent U.S. macroeconomic data, which showed persistent inflation, labor market strength, and robust services activity.

Despite a brief early-year rally in crypto prices, investor behavior shifted quickly across four consecutive days of outflows totaling $1.3 billion. This series nearly erased the $1.5 billion inflows logged during the year’s first two trading days. As a result, the outlook for digital assets dimmed sharply, especially in the United States.

The CME FedWatch tool showed expectations for a March interest rate cut falling, reflecting changing sentiment in broader markets. Investors responded swiftly, reducing exposure to Bitcoin and other large-cap assets. The net effect pushed crypto fund flows into negative territory for the week, although month-to-date flows remained positive at $229 million.

Ether, Multi-Asset and Altcoins Show Mixed Flows

Ethereum-linked funds recorded $116 million in net outflows last week, continuing a trend of cautious investor positioning in the asset. Multi-asset crypto funds also saw $21 million in outflows, adding to the broader market retreat. Funds linked to Binance and Aave registered smaller outflows of $3.7 million and $1.7 million, respectively.

In contrast, selective interest in altcoins continued as inflows into specific products bucked the wider trend. Solana funds attracted $32.8 million last week, while XRP funds gained $45.8 million. Investment in Sui-based products also grew, with $7.6 million in inflows, showing targeted appetite for alternative assets.

Butterfill noted that while large-cap assets faced pressure, “sentiment around some alternate tokens remained constructive.” These inflows highlight pockets of risk-on behavior among investors. The data suggests interest has shifted toward tokens perceived to have different value propositions.

US Records Heavy Outflows While Europe and Canada Attract Inflows

Regionally, the United States posted the highest crypto fund outflows, totaling $569 million last week alone. This reflected a sharp swing in sentiment driven by economic data and monetary policy expectations. By contrast, several other regions registered positive flows, offsetting some of the U.S.-led losses.

Germany led with $58.9 million in inflows, followed by Canada with $24.5 million and Switzerland with $21 million. These markets maintained a more constructive tone, supporting asset growth. The divergence points to differing investor expectations based on regional macro conditions.

CoinShares reported that despite last week’s losses, total assets under management in crypto ETPs rose slightly to $181.9 billion. BlackRock’s iShares products and Profunds Group led the weekly inflows with $181 million and $180 million, respectively. Meanwhile, Fidelity and Grayscale accounted for most of the outflows, with $454 million and $360 million withdrawn.

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