The cryptocurrency market has seen another challenging week, with global crypto investment funds experiencing net outflows of $508 million, according to a recent report from CoinShares. This marks the second consecutive week of capital exiting digital asset funds, bringing the total outflows to $924 million over two weeks.
Market Caution Following U.S. Political Changes
Analysts attribute the decline to investor caution in response to macroeconomic uncertainty, particularly after the U.S. presidential inauguration. Concerns over potential shifts in trade tariffs, inflation, and monetary policy have led to reduced risk appetite. CoinShares’ Head of Research, James Butterfill, highlighted that trading turnover has also fallen significantly, dropping from $22 billion two weeks ago to $13 billion last week.
Bitcoin Leads Outflows, While Some Altcoins Attract Interest
Bitcoin investment products accounted for the majority of outflows, with $571 million leaving funds, particularly from U.S.-based spot Bitcoin ETFs, which saw $552.5 million in withdrawals. However, while many investors pulled funds from BTC, some altcoin-based funds bucked the trend. XRP investment products recorded $38.3 million in inflows, reflecting optimism that Ripple’s ongoing legal battle with the SEC could see a resolution.
Ethereum (ETH), Solana (SOL), and Sui (SUI) funds also saw moderate inflows of $3.7 million, $8.9 million, and $1.5 million, respectively, despite price declines across the board. Notably, SOL dropped 13.7%, while XRP and ETH fell by 7.5% and 1.8%, respectively.
A Shift in Regional Sentiment
The outflows were largely driven by U.S. funds, which saw $560 million in withdrawals. However, European investors demonstrated a contrasting sentiment, as funds in Germany, Switzerland, and Sweden attracted net inflows of $30.5 million, $15.8 million, and $4.9 million, respectively.
Investment Implications
The divergence between U.S. and European market sentiment highlights shifting risk preferences among global investors. While Bitcoin remains the dominant asset in crypto funds, its near-term outlook remains uncertain as investors reassess their exposure in light of economic and regulatory developments. Meanwhile, the inflows into altcoins like XRP and SOL suggest that some investors are selectively positioning themselves for potential upside.
As always, investors should conduct thorough research before making any financial decisions. This article does not constitute investment advice.
