Digital Asset Funds Bleed $454M in Weekly Outflows as Fed Rate-Cut Hopes Evaporate: CoinShares

The music stopped. Digital asset funds just hemorrhaged $454 million in a single week—the largest outflow since the bear market's deepest chill.

The Fed's Cold Shower

Hope for imminent rate cuts got iced. Traders, who'd positioned for a dovish pivot, scrambled for the exits when the central bank's language turned hawkish. The 'free money' narrative that fueled the last rally? Gone. This isn't a blip; it's a fundamental repricing of risk.

Where the Money Fled

Broad-based selling hit Bitcoin hardest, but the contagion spread. The outflows reveal a market-wide deleveraging, not just profit-taking on a single asset. It's a classic flight to safety—or at least, to less volatile pastures.

The Institutional Mood Swing

Short-term sentiment flipped from greed to fear overnight. The so-called 'smart money' in regulated funds is leading the retreat, a stark contrast to the retail diamond hands meme. It seems even the pros get spooked when the cost of capital recalibrates.

One week doesn't make a trend, but it sure can break one. The crypto market, forever tied to macro liquidity, just got a brutal reminder that the Fed doesn't do bailouts for digital dreams. The old guard on Wall Street must be chuckling into their overpriced lattes—another 'disruptive' asset class learning that when the real world's interest rates speak, everything else listens.

Rate Cut Doubts Weigh on Early-Year Momentum

Investor Optimism at the start of the year had been underpinned by hopes that the Federal Reserve would begin easing monetary policy early in 2026.

However stronger-than-expected economic indicators and firm labour market data have tempered those expectations prompting risk-off behaviour across digital asset investment products.

As a result much of the capital that flowed into crypto products during early January has already exited the market, underscoring how sensitive digital assets remain to shifts in macroeconomic outlooks.

US Dominates Regional Outflows

CoinShares reports regionally the United States accounted for the vast majority of last week’s outflows, with US-listed products seeing $569 million withdrawn. This contrasted sharply with sentiment elsewhere, as several non-US markets continued to attract capital.

Germany led inflows with $58.9 million, followed by Canada at $24.5 million and Switzerland at $21 million, highlighting a notable divergence between US and European investor behaviour.

Bitcoin and Ethereum Lead Asset-Level Withdrawals

At the asset level, bitcoin experienced the largest outflows shedding $405 million over the week. Interestingly, short-Bitcoin products also saw $9.2 million in outflows suggesting mixed conviction among bearish investors rather than a clear directional bet against the asset.

Ethereum followed with $116 million in outflows, reflecting broader caution toward large-cap digital assets. Multi-asset products recorded $21 million in withdrawals while smaller outflows were seen from Binance- and Aave-linked products, totalling $3.7 million and $1.7 million, respectively.

Select Altcoins Attract Fresh Capital

Despite the broader risk-off tone some assets continued to draw investor interest. XRP led inflows with $45.8 million, followed by solana at $32.8 million and Sui at $7.6 million.

These inflows point to selective positioning rather than a wholesale retreat from the market, as investors rotate into assets perceived to have stronger near-term catalysts or relative resilience amid macro uncertainty.