Crypto Funds Hit $454M Weekly Exodus as Fed Rate-Cut Hopes Dim

Bitcoin-linked products lost $405 million as investors cut exposure amid heightened uncertainty.

Digital asset investment products recorded net outflows of $454 million this past week as investor sentiment changed rapidly in early January. The market experienced four consecutive days of net withdrawals, which rose to $1.3 billion, erasing $1.5 billion in derivatives during the first two trading days of January.

CoinShares attributed the change in direction to growing concerns that the Federal Reserve is unlikely to deliver an interest rate cut in March, following stronger-than-expected recent macroeconomic data.

XRP, Solana Defy Broader Slump

In the latest edition of the Digital Asset Fund Flows Weekly Report, CoinShares revealed that Bitcoin was the most affected asset, as products linked to the cryptocurrency saw $ 405 million leave during the week. At the same time, short Bitcoin products also registered $9.2 million in outflows, which indicated a lack of consensus among investors regarding the immediate price direction.

Ethereum-based products also faced heavy selling pressure, with outflows of $116 million, while multi-asset strategies saw outflows of $21 million.

Smaller declines were seen in products tied to Binance and Aave, which saw $3.7 million and $1.7 billion leave, respectively.

On the other hand, many altcoin investment products continued to attract new capital. XRP led the group as it won $45.8 million, followed by Solana with $32.8 million and Sui who received $7.6 million. Chainlink also saw renewed interest and added $3 million last week.

From a regional perspective, the recent decline in digital asset investment products was largely driven by the United States, while the activity of investors outside the US remains profitable, albeit on a much smaller scale. The US saw $569 million in digital asset sales.

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In contrast, Germany recorded strong inflows of $58.9 million, followed by Canada with $24.5 million and Switzerland with $21 million. Smaller gains were reported in Australia at $4.7 million, the Netherlands at $3.2 million, France at $1.4 million, Sweden at $0.4 million, and New Zealand at $0.3 million.

“Push-Out of Bullish Expectations”

This cautious approach has been reflected in recent price action. QCP Capital, for one, said that Bitcoin’s recent price action indicates continued pressure and limited upside in the near term. While the commodity initially rose alongside gold and silver during early Asian trade as the US dollar weakened, the move quickly faded.

Bitcoin failed to sustain levels above $92,000 and declined during the European session. In doing so, crypto ended up repeating a pattern seen several times in the fourth quarter of last year.

According to QCP, BTC has often struggled to hold gains even when supported by narratives that could be considered positive. The firm also identified changes in the options market, where traders are reducing long-term bullish call positions and rolling others to expire later. This means that expectations of higher prices are delayed.

Continued selling during US trading hours, ongoing supply pressures, and growing uncertainty still weigh on prices, as near-term volatility risks remain high ahead of US economic and regulatory developments.