Crypto Investment Products Faces Early Outflow Storm

Crypto investment products began 2026 on a strong note, but that momentum weakened quickly. After attracting about $1.5 billion in inflows during the first two trading days of the year, the market reversed course. 

Four consecutive days of withdrawals erased a significant portion of those gains, reflecting a clear change in investor sentiment after an earlier wave of strong optimism.

Interest Rate Expectations Drive Caution on Crypto Products

According to CoinShares’ latest report, crypto exchange-traded products (ETPs) saw $454 million leave the market last week. This shows that investors are becoming more careful as wider economic conditions continue to influence digital asset markets.

The main reason behind the pullback lies outside the crypto market itself. CoinShares’ Head of Research, James Butterfill, pointed to rising concerns about U.S. monetary policy. 

Recent economic data has reduced expectations that the U.S. Federal Reserve will cut interest rates in March. As hopes for near-term rate cuts faded, investors reduced exposure to risk assets, including crypto. 

This shows how closely digital asset markets now follow broader economic signals.

Bitcoin Leads the Outflows while Altcoins Show Relative Strength

Flagship crypto Bitcoin (BTC) led last week’s losses, with Bitcoin ETPs seeing $405 million in outflows, marking it the main driver of the broader market decline. 

Short-Bitcoin products also had small outflows of $9 million. At the same time, Ethereum (ETH) products lost $116 million. This massive withdrawal shows investors were unsure, with no strong bullish or bearish view.

While Bitcoin and Ethereum funds struggled, some altcoins still gained interest. Funds linked to XRP saw about $46 million in inflows, Solana attracted $33 million, and Sui added nearly $8 million. 

Multi-asset altcoin products, however, recorded $21 million in outflows, showing confidence was limited to a few selected assets.

U.S. Outflows Contrast With Strong Inflows in Other Crypto ETP Markets

Sentiment differed by region last week. The United States was the only market with net outflows, losing $569 million. This shows that U.S. investors reacted more strongly to changes in interest rate expectations.

Other regions showed more positive signs. Germany recorded inflows of $59 million, Canada added $25 million, and Switzerland attracted $21 million. These gains helped reduce the overall global losses and reflect different investment approaches across regions.

Despite the outflows, total assets under management in crypto ETPs stayed mostly stable. By the end of the week, total assets stood at $181.9 billion, slightly up from $181.3 billion the previous week.

Looking at issuers, BlackRock’s iShares products and Profunds Group saw the strongest inflows, with $181 million and $180 million added, respectively. 

In contrast, Fidelity Investments and Grayscale Investments recorded the largest outflows, losing $454 million and $360 million, respectively.