The mood across digital asset markets has shifted sharply—and the money is leaving no doubt.
Crypto investment funds recorded $1.7 billion in net outflows last week, marking a second consecutive week of heavy withdrawals and wiping out year-to-date inflows into a net $1 billion outflow, according to the latest data. What had looked like a slow bleed is now shaping up as a decisive turn in investor sentiment.
This isn’t just about falling prices. It’s about confidence—and right now, confidence is in short supply.
📉 A $73 Billion Shrink Since the Peak
The pullback is accelerating a much larger contraction across the digital asset investment landscape.
Since peaking in October 2025, total assets under management (AuM) across crypto investment products have fallen by $73 billion. The decline reflects a toxic mix of sustained price weakness and persistent capital flight, as investors increasingly opt for caution over conviction.
CoinShares head of research James Butterfill says the downturn is being driven by a convergence of macro and market-specific forces—none of them friendly to risk assets.
🏦 Why Investors Are Pulling Back
Butterfill points to three key pressures reshaping behavior:
A more hawkish U.S. Federal Reserve Chair, raising expectations of tighter financial conditions
Ongoing whale selling, consistent with patterns seen in the four-year crypto cycle
Rising geopolitical volatility, pushing capital toward perceived safe havens
“We believe this reflects a combination of factors,” Butterfill wrote, “including the appointment of a more hawkish U.S. Federal Reserve Chair, continued whale selling associated with the four-year cycle, and heightened geopolitical volatility.”
Nowhere was the impact clearer than in the United States.
🇺🇸 The U.S. Leads the Exit
Of the $1.69 billion in weekly outflows, a staggering $1.65 billion came from U.S.-based products. The concentration underscores just how sensitive crypto markets remain to Federal Reserve expectations and shifts in broader financial conditions.
Elsewhere, flows were also negative, though on a far smaller scale—suggesting the U.S. remains the epicenter of sentiment swings in digital assets.
🔻 Bitcoin and Ethereum Take the Hit
The sell-off was broad, but Bitcoin absorbed the heaviest blow.
Bitcoin shed $1.32 billion in outflows, as investors reduced exposure to the market’s bellwether asset—helping explain its recent price slump.
Ethereum followed with $308 million in withdrawals, signaling waning confidence even in assets often viewed as long-term structural plays.
Even recent market darlings weren’t spared:
XRP saw $43.7 million in outflows
Solana lost $31.7 million
The data paints a clear picture: investors are rotating away from higher-beta crypto exposure across the board.
🛡️ Hedging, Not Hoping
Yet amid the gloom, a subtle shift is revealing how traders are adapting.
Short Bitcoin investment products attracted $14.5 million in inflows, pushing their year-to-date AuM up 8.1%. Rather than betting on a quick rebound, investors appear increasingly focused on hedging against further downside.
At the same time, a surprising bright spot emerged.
So-called Hype investment products pulled in $15.5 million, buoyed by growing on-chain activity tied to tokenized precious metals. As crypto volatility spikes, these products are gaining traction as an alternative store-of-value narrative—bridging digital rails with traditional safe-haven assets.
🧭 A Market in Defensive Mode
Taken together, the flow data suggests a crypto market firmly in defensive posture. Capital is exiting core assets, leverage is being reduced, and only niche strategies—short exposure and tokenized metals—are attracting fresh inflows.
Whether sentiment stabilizes from here will likely hinge on several unresolved variables:
Key U.S. economic data and policy signals
A slowdown in large-holder selling
A reduction in geopolitical tensions
For now, investors aren’t chasing upside—they’re protecting capital. And until those pressures ease, caution looks set to remain the dominant trade in crypto markets.