Crypto Funds Face $508M Outflows as Investors Remain Cautious

Global crypto investment funds recorded $508 million in outflows last week as uncertainty over trade policies and monetary decisions weighed on investors. 

This marks the second consecutive week of withdrawals, bringing total outflows over the past two weeks to $924 million, according to data from CoinShares.

Market Caution After U.S. Presidential Inauguration

It is worth mentioning that recent political changes in the U.S., particularly the inauguration of president Donald Trump, have contributed to investor hesitancy. Notably, many analysts believe that concerns over trade tariffs, inflation, and future monetary policies lead investors to pull back from crypto investment products.

For example, James Butterfill, Head of Research at CoinShares, noted in his weekly crypto outflow report that “investors are exercising caution following the U.S. Presidential inauguration and the consequent uncertainty around trade tariffs, inflation, and monetary policy.”

Similarly, this careful stance can be seen in trading activity. For instance, two weeks ago, digital asset funds had a trading turnover of $22 billion, but last week, it dropped to $13 billion. Essentially, this means that fewer people are trading. 

In addition, market interest is slowing down. The lower trading volumes suggest investors are patient and await clearer signs before making big financial decisions.

Bitcoin Leads Crypto Fund Outflows, Altcoins Show Mixed Performance

Furthermore, Bitcoin investment products suffered the largest losses, recording $571 million in outflows. The decline in Bitcoin-backed funds coincides with generally flat price movements, with Bitcoin dropping just 0.3% last week.

However, despite this negative market pattern, many institutional investors such as Strategy, Metaplanet, and Fidelity still added to their BTC holdings. This also pushed Bitcoin market capitalization to a large extent. But the negative outflow is still making it fluctuate.

Meanwhile, some altcoins bucked the trend. XRP led altcoin inflows, attracting $38.3 million last week. Solana followed with $8.9 million, while Ethereum and Sui saw inflows of $3.7 million and $1.5 million, respectively. Additionally, XRP also saw some new developments in its holdings. For example, Brazilian payment services Braza Group introduced BBRL stablecoin using the XRP Ledger (XRPL).

Likewise, XRP’s strong inflows continue a pattern that has been building since mid-November, with $819 million added to XRP-based investment products. Butterfill attributed this trend to “investor hopes that the Securities and Exchange Commission will drop its lawsuit against Ripple.”

Despite these positive inflows, XRP’s price fell 7.5% over the past week. Ethereum slipped by 1.8%, Solana saw a sharper drop of 13.7%, and Sui declined 0.7%. 

Regional Differences in Investment Trends

The outflows were mainly concentrated in the U.S., where crypto funds lost $560 million. However, not all regions followed the same pattern. Investment funds in Germany, Switzerland, and Sweden reported net inflows of $30.5 million, $15.8 million, and $4.9 million, respectively.

These numbers show the differing market outlooks across regions. While U.S. investors appear wary of regulatory and economic risks, European investors are taking a more positive position, seizing potential buying opportunities amid market volatility.