Crypto Funds See Massive $508M Outflow—Are Investors Getting Cold Feet?

Crypto asset investment products experienced significant outflows last week, according to the latest fund flows report from CoinShares. The report revealed that outflows totaled $508 million, bringing the cumulative two-week outflows to $924 million.

These recent trends follow an 18-week streak of inflows that had accumulated $29 billion. CoinShares attributes this reversal to cautionary investor behavior amid macroeconomic uncertainty.

Altcoins Buck the Trend as XRP Leads Inflows

Despite the broader outflows, altcoins saw continued interest from investors. XRP particularly led the inflows with $38.3 million, continuing a strong trend since mid-November.

According to the CoinShares report, XRP has now recorded $819 million in cumulative inflows, reflecting optimism among investors that the US Securities and Exchange Commission (SEC)’s lawsuit against the cryptocurrency may be resolved favorably.

Other altcoins followed suit, with Solana, Ethereum, and Sui posting inflows of $8.9 million, $3.7 million, and $1.47 million, respectively. Bitcoin, however, bore the brunt of the outflows, with $571 million leaving Bitcoin-focused investment products.

Interestingly, some investors increased their exposure to short-Bitcoin positions, which saw inflows of $2.8 million. This divergence in investor sentiment between Bitcoin and certain altcoins highlights the nuanced dynamics at play in the crypto investment space.

Notably, while altcoins managed to buck the outflow trend which affected Bitcoin, same can’t be said concerning price performance. Over the past weeks, not only BTC has faced a bearish trend other altcoins have also faced their share of decline.

For instance, while Bitcoin dropped by 0.8% in the past week, Ethereum, XRP and Solana has plunged by 3.2%, 7.6% and 14.3% respectively over the same period. This decrease in each of these cryptocurrencies has led to several breach of key support levels.

At the time of writing, BTC trades at $95,567 down by 0.5% in the past day. Ethereum trades at $2,674 dropping by 4.9% in the past 24 hours. XRP also currently trades at $2.48 recording a 3.5% in the past day, Solana at $158 with a 6.8% drop while Sui at $3.17 decreasing 6% in value over the same period.

Regional Trend And Reason Behind The Crypto Funds Outflow

Commenting on the fund outflows, James Butterfill, Head of Research at CoinShares, noted:

 We believe investors are exercising caution following the US Presidential inauguration and the consequent uncertainty around trade tariffs, inflation and monetary policy.

Butterfill added that trading turnover also declined substantially, falling from $22 billion two weeks ago to $13 billion last week. This decrease reflects a more hesitant market sentiment, particularly in the US, where outflows were most concentrated.

The region saw $560 million in outflows, in stark contrast to Europe, which continued to record healthy inflows, including $30.5 million from Germany and $15.8 million from Switzerland.

Featured image created with DALL-E, Chart from TradingView