Quick Breakdown
- Crypto investment products recorded $454M in weekly outflows as early-year gains were largely erased.
- Fading expectations of a March Fed rate cut triggered a risk-off shift, led by US investors.
- Bitcoin and Ethereum saw the biggest withdrawals, while XRP, Solana and Sui attracted inflows.
Digital asset investment products posted $454 million in net outflows last week, extending a sharp reversal that has erased most of the gains recorded at the start of 2026, according to CoinShares report.
The latest pullback follows four consecutive days of withdrawals totalling $1.3 billion, nearly wiping out the $1.5 billion in inflows seen during the first two trading days of the year. The shift reflects growing caution among investors as expectations for an early US interest rate cut begin to cool.
Fed Rate cut doubts trigger risk-off shift
Investor sentiment turned sharply after recent macroeconomic data suggested inflation could remain stickier than anticipated, weakening expectations that the US Federal Reserve will cut rates as early as March.
Stronger-than-expected economic and labour market figures have prompted a broader risk-off move, with digital asset products proving particularly sensitive to shifts in the monetary policy outlook. As a result, much of the capital that flowed into crypto investment products in early January has already exited the market.
US leads outflows as Europe shows resilience
Regionally, the United States accounted for the bulk of last week’s withdrawals, with US-listed products recording $569 million in outflows. This stood in contrast to several non-US markets, where investors continued to allocate capital to digital assets.
Germany topped inflows with $58.9 million, followed by Canada with $24.5 million and Switzerland with $21 million, highlighting a clear divergence between US and European investor sentiment.
At the asset level, Bitcoin led weekly outflows at $405 million. Short-Bitcoin products also recorded $9.2 million in withdrawals, pointing to mixed conviction rather than a strong bearish stance. Ethereum followed with $116 million in outflows, while multi-asset products shed $21 million. Smaller withdrawals were also recorded from Binance- and Aave-related products.
Despite the broader pullback, select altcoins attracted fresh capital. XRP led inflows with $45.8 million, followed by Solana at $32.8 million and Sui at $7.6 million, suggesting investors are rotating into assets with perceived near-term catalysts rather than exiting the market entirely.
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