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Cryptocurrency funds recorded their biggest weekly cash outflow since mid-November 2025, losing a total of $1.73 billion. This happened as investor sentiment in cryptocurrency markets continues to shift clearly towards risk aversion, with three factors explaining this pullback.
The scale and complexity of the recalls point to a market that is still struggling to regain confidence. This happened amid ongoing macro uncertainty and fading narratives around the role of cryptocurrencies as a hedging tool.
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Cryptocurrency flows reached $1.73 billion last week: What you need to know
The latest Coinshares report stated that the selling wave was largely concentrated in the United States, which accounted for about $1.8 billion of the total flow.
At the asset level, there was a wide decline, with Bitcoin leading the decline with flows amounting to $1.09 billion.
This was the largest flow in Bitcoin products since mid-November 2025, suggesting that sentiment has not yet recovered from the sharp drop in prices observed in October.
Bitcoin short investment products recorded a small outflow of $0.5 million. However, this gap indicates a defensive position rather than a conviction-driven bearish bet.
Ethereum followed closely in Bitcoin’s footsteps, recording inflows of $630 million, while XRP saw a more modest inflow of $18.2 million from investment products.
Taken together, these data show that selling pressure is not limited to a single narrative or symbol, but rather reflects a broader recalibration of cryptocurrency exposure in wallets. However, some notable exceptions were found.
The report stated that Solana bucked the trend with inflows of $17.1 million, while others recorded smaller inflows, notably Binance ($4.6 million) and Chainlink ($3.8 million).
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These distributions indicate that some pockets of the market are still attracting interest, especially among investors looking for relative strength or… Stimuli that are specific to specific ecosystems.
Three fundamental forces shape investor behavior
It is worth noting that the flows of cryptocurrency funds last week indicate a review of what the markets saw in the week ending January 17. According to BeInCrypto, cryptocurrency funds have registered. Inward flow reached $2.17 billionwith Bitcoin leading the way.
James Butterville, Head of Research at CoinShares, highlights three fundamental forces driving crypto outflows.
- The expectation of interest rate cuts is fading
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At first, The expectation of interest rate cuts is fading It undermined one of the most important catalysts for the upside of cryptocurrencies at the macroeconomic level. CME FedWatch data shows that markets estimate the probability of a Fed rate cut to a measly 2.8%.
As markets postpone the timeline for monetary policy easing, speculative assets, including digital assets, have faced increasing pressure, Especially from corporate entities Sensitive to real yields and liquidity conditions.
The negative price momentum continued to reinforce the market’s bearish positioning. The failure of major cryptocurrencies to achieve a sustained rally from the October 2025 decline has kept trend-following and risk-management strategies on the sidelines.
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This prevailing bearish sentiment will amplify capital exits from the cryptocurrency market during any possible period of weakness.
- Cryptocurrencies have not benefited from the decrease in the value of fiat currencies
Potterville noted growing disappointment that digital assets are not yet involved in the depreciation trade.
Despite persistent fiscal deficits, high government borrowing, and concerns about the long-term erosion of the value of fiat currencies, cryptocurrencies have not yet been able to regain their narrative as a solid and proven hedge against declining monetary value.
Potterville said this is causing some investors to question the short-term role of cryptocurrencies in diversified portfolios.
Low expectations for interest rate cuts, negative price momentum, and disappointment that digital assets did not participate in the currency’s declining trade likely fueled these flows, the Coinshares executive wrote.
Taken together, the latest flows reflect a market still looking for a catalyst. Crypto funds will remain under pressure until macro-level expectations change, price momentum stabilizes, or cryptocurrencies firmly confirm their overall relevance again.
