Crypto Funds Swing from Record Inflows to $1.2B Outflows as Bitcoin, Ethereum Lag Amid Rate Cut Uncertainty
Digital asset investment products have experienced a sharp reversal, moving from a nine-week streak of record inflows to consecutive weeks of significant outflows totaling $1.2 billion, according to CoinShares. Investor sentiment turned cautious due to uncertainty around potential US Federal Reserve rate cuts and broader macroeconomic shifts. In the most recent week, crypto funds saw $584 million in outflows—the largest weekly withdrawal since the launch of US spot Bitcoin ETFs—driven mainly by Bitcoin (BTC), which lost $630 million, and Ethereum (ETH), with $58 million in exits. Notably, short Bitcoin products also saw outflows, reflecting a lack of strong bearish bets among traders.
Regionally, the US and Canada led the withdrawals, while Switzerland and Brazil were exceptions, registering net inflows. Despite the bearish trend in major cryptocurrencies, some altcoins like Solana (SOL), Litecoin (LTC), and Polygon (MATIC) saw modest inflows, signaling opportunistic buying in weaker segments. Diversified crypto funds also attracted new capital, suggesting strategic allocation shifts amidst volatility. Global ETP trading volume fell to $6.9 billion, the lowest since US spot Bitcoin ETFs went live. The divergence in fund flows, both regionally and across different crypto assets, underscores increased caution and mixed sentiment among investors facing macroeconomic headwinds.
Crypto traders should note the swift change in capital flows, with major coins facing pressure and altcoins attracting selective interest, likely leading to increased price divergence and creating both risks and opportunities in the current market environment.
Bearish
The switch from strong inflows to large-scale outflows in crypto funds—particularly affecting Bitcoin (BTC) and Ethereum (ETH)—signals broad investor caution amid economic uncertainty, notably around US Federal Reserve rate cut decisions. The size and persistence of withdrawals, combined with reduced ETP trading volumes, indicate waning confidence and potentially short-term downward pressure on major cryptocurrencies. While selective inflows into altcoins and diversified products suggest some opportunistic positioning, the dominant narrative is risk-off, especially for BTC and ETH. Historically, such massive outflows have led to increased volatility and price dips for leading assets. Unless macro conditions clarify or market confidence rebounds, traders should expect continued bearish pressure, though pockets of opportunity may emerge in select altcoins.