Despite a late-week dovish signal from Fed Chair Powell that spurred a $594 million rebound, crypto funds still bled $1.43 billion overall. The outflows, however, were not uniform, revealing a divergence in investor confidence between major assets.
Summary
- Crypto funds saw $1.43 billion in outflows last week, the largest since March, amid Fed policy concerns.
- Bitcoin bore the bulk of the selloff with $1 billion in redemptions, while Ethereum limited outflows to $440 million.
- Exchange-traded product volumes surged to $38 billion, signaling active institutional repositioning.
According to the weekly report from CoinShares Head of Research James Butterfill, the substantial capital flight was primarily triggered by mounting anxiety over the Federal Reserve’s potential commitment to a more restrictive monetary policy.
This pessimism early in the week catalyzed a massive $2 billion in outflows, setting a negative tone that, despite a partial recovery, culminated in the largest single-week withdrawal since March.
The flight to safety was underscored by a surge in exchange-traded product activity, with weekly volumes hitting $38 billion, a clear sign of heightened institutional maneuvering.
Behind the headline numbers
Bitcoin, often viewed as digital gold and a bellwether for the sector, shouldered the majority of the selling pressure. Investors pulled approximately $1 billion from Bitcoin-focused funds, reflecting a classic risk-off response to potential macroeconomic tightening.
This movement suggests that institutions still largely treat Bitcoin (BTC) as a high-beta risk asset, quickly liquidating positions when traditional market uncertainty spikes. In contrast, Ethereum (ETH) demonstrated notable resilience, weathering the storm with outflows of just $440 million.
Notably, while Bitcoin has seen net outflows of $1 billion this August, Ethereum has attracted a substantial $2.5 billion in net inflows. This trend indicates a potential strategic shift in institutional portfolios, where capital is not simply entering or exiting the digital asset space but is being reallocated within it based on perceived strong fundamentals and yield-generating potential.
Rotation into altcoins
Despite the sector-wide outflow, several altcoins recorded inflows. XRP led this group with $25 million in positive flows, followed by Solana at $12 million and Cronos with $4.4 million.
Conversely, Sui and TON faced outflows of $12.9 million and $1.5 million respectively. This mixed picture reveals a market maturing beyond monolithic sentiment. Investors appear to be making project-specific bets and rewarding protocols with strong development activity and clear use cases while withdrawing from others, even amidst broader market stress.
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