Cryptocurrency outflows amounted to a total of $876 million last week, completing a consecutive negative trend over the previous 4 weeks.
This sustained selling has led to cumulative outflows of $4.75 billion over the past month, significantly reducing inflows to $2.6 billion compared to the beginning of the year. As a result, total assets under management (AuM) have decreased by $39 billion from the peak to the current $142 billion, the lowest level since mid-November 2024.
Cryptocurrency Outflows of $876 Million
According to the latest
CoinShares report, US investors were the main drivers of the outflows, withdrawing $922 million from digital asset investment products. This bearish sentiment in the US contrasts with other regions, where investors have viewed the recent market correction as a buying opportunity.
Bitcoin was the main focus of last week's cryptocurrency outflows. The report shows that investors withdrew $756 million from Bitcoin investment products last week. Notably, short Bitcoin products designed to profit from price declines also recorded $19.8 million in outflows, the largest since December 2024, suggesting that some investors are nearing capitulation on their Bitcoin investments as uncertainty grows, leading them to unwind short positions.
Nevertheless, last week's cryptocurrency outflows recorded another significant decrease following the sustained withdrawals. In the first week of March, digital asset investment products saw record
$2.9 billion in outflows, triggered by weak investor sentiment and heightened market fear, according to BeInCrypto.
This followed the
$508 million in outflows the previous week, as well as the
$415 million in withdrawals due to the Federal Reserve's hawkish rhetoric and inflation concerns.
The Fed's stance on monetary policy has influenced investor behavior in recent months. As inflation has exceeded expectations, the Fed has
hinted that interest rates could remain elevated for an extended period, reducing liquidity in financial markets and putting pressure on risky assets like cryptocurrencies.
"We don't need to rush and we're in a good position to wait for a clearer picture." - Jerome Powell, Federal Reserve Chair statement
The cryptocurrency market is facing pressure from 4 consecutive weeks of outflows and
persistent macroeconomic headwinds. While certain assets like Solana and XRP are still attracting inflows, the overall sentiment, particularly among US investors, is bearish.
If market conditions do not improve, further outflows may occur in the coming weeks, reinforcing a cautious approach among investors.
Bitcoin and Ethereum ETF Weakness Reflected
The negative sentiment has also impacted blockchain-related stock exchange-traded products (ETPs). According to the latest CoinShares report, these financial products saw $48 million in outflows over the same period.
This decline reflects a risk-averse mood across the digital asset sector, with investors exercising caution. This aligns with a recent BeInCrypto report that
Bitcoin ETFs recorded net outflows exceeding $4.5 billion for 4 consecutive weeks.
Similarly, Ethereum ETFs have continued the negative trend, recording net outflows for 2 consecutive weeks. This negative flow occurred despite expectations surrounding the recent White House cryptocurrency summit. The outflows suggest that macroeconomic concerns and strategic market positioning overshadowed the event's influence.
"...hedge funds are not interested in Bitcoin. They were farming low-risk yields. Now that the trade is over, they are withdrawing liquidity. The market is in free fall...This is a classic case of a liquidity game. ETFs have not only brought in long-term holders but also short-term arbitrage hedge funds." - Cryptocurrency analyst Kyle Chasse explanation
