Digital asset funds just suffered their largest weekly outflows since February, with $2 billion exiting crypto ETPs last week. The crypto outflows extended a two-week rout driven by US policy uncertainty, hawkish Fed signals, and renewed whale selling.
XRP, which had previously seen institutional inflows, reversed sharply, with nearly $16 million in outflows, reflecting the breadth of the sentiment shift.
Last week’s $2 billion outflow follows the $1.17 billion drained the week before, marking a combined $3.2 billion flight from crypto funds in just 14 days.
CoinShares’ research lead, James Butterfill, attributes the downturn to a mix of monetary policy uncertainty, crypto-native whale distribution, and the lingering volatility that followed October’s liquidity shocks.
“We believe the combination of monetary policy uncertainty and crypto-native whale sellers is the main reason for this most recent negative funk,” read an excerpt in the latest report.
Total assets under management in digital asset ETPs collapsed from $264 billion in early October to $191 billion, a steep 27% decline.
The US accounted for 97% of last week’s outflows ($1.97 billion), a dramatic continuation of the prior week’s $1.22 billion in US-led outflows.
The catalyst: Federal Reserve Chair Jerome Powell’s hawkish tone, including resistance to cutting rates and renewed focus on inflation risks. Hopes for a December rate cut evaporated, replaced by fear of prolonged tight liquidity and the rising threat of a government budget standoff.
The result has been a broad risk-off shift, with ETP investors quickly reducing exposure to Bitcoin, Ethereum, and high-beta crypto assets.
Switzerland and Hong Kong followed with outflows of $39.9 million and $12.3 million, respectively. At the same time, Germany again broke from the trend, adding $13.2 million in inflows last week after recording $41.3 million in inflows the week prior. Europe’s comparative optimism remains one of the few bright spots in an otherwise negative global picture.
XRP, which recently benefited from moderate inflows, saw $15.5 million in outflows, marking a notable reversal from earlier strength.
Solana also experienced minor outflows of $8.3 million, a sharp contrast from previous weeks when Solana products saw record inflows, driven by new US ETF demand.
Bitcoin ETPs lost $1.38 billion last week, bringing their three-week total to 2% of AUM. The prior week saw another $932 million drained, confirming that institutional sentiment toward BTC has turned sharply defensive.
Ethereum fared proportionally worse, with $689 million in outflows, representing 4% of its AUM. This builds on the previous week’s $438 million in ETH outflows, reflecting widening investor uncertainty about Ethereum’s near-term performance.
Short-Bitcoin products continued to attract inflows — another sign that institutions are hedging against further downside.
Even so, investors did rotate $69 million into multi-asset ETPs, signaling a search for diversification rather than a complete retreat from crypto exposure.
With US policy uncertainty dominating global investor behavior, fund flows are likely to hinge on upcoming Fed communications, potential budget resolutions, and broader macroeconomic stability. Another hawkish pivot, or renewed political gridlock, could prolong outflows.
However, a shift toward clearer guidance or easing inflation pressures may revive demand, particularly for the assets hardest hit in the recent selloff.
