Bitcoin Faces Significant Outflows Amid Broader Market Weakness and Regulatory Uncertainty

• Digital asset investment products saw $2.9 billion in outflows last week, marking three straight weeks of declines.

• BTC lost $2.59 billion, while ETH saw its worst outflows at $300 million, reflecting weakened sentiment.

• Sui gained $15.5 million, while XRP attracted $5 million, fueled by ETF speculation and Trump’s crypto reserve policy.

The crypto market is facing unprecedented challenges with record outflows amidst bearish sentiment, raising concerns around security and macroeconomic factors.

Crypto Outflows See New Records

Over the past week, crypto outflows reached a staggering $2.9 billion, bringing the three-week total to $3.8 billion. This marks the third consecutive week of capital exiting the crypto sector, a stark contrast to the preceding 19-week inflow streak which saw $29 billion pour into the market.

The latest CoinShares report ascribes the negative flows to weakening sentiment across the crypto market. It cites factors such as the recent Bybit hack among key contributors to the mounting outflows, along with a more hawkish stance from the Federal Reserve and broader macroeconomic concerns surrounding inflation.

“We believe several factors contributed to this trend, including the recent Bybit hack, a more hawkish Federal Reserve, and the preceding 19-week inflow streak totaling US$29bn. These elements likely led to a mix of profit-taking and weakened sentiment toward the asset class,” read an excerpt from the report.

As COINOTAG reported, the hack, which resulted in millions of dollars stolen, has shaken investor confidence and reinforced fears over security vulnerabilities in the crypto space. Additionally, the Federal Reserve’s latest comments indicated a cautious outlook on inflation and the US GDP, leading to broader market uncertainty and a decline in risk appetite.

Against this backdrop, CoinShares’ researcher James Butterfill highlights Bitcoin as the hardest hit by the bearish sentiment, experiencing outflows of $2.59 billion last week. Ethereum also suffered, recording its highest weekly outflows at $300 million, with other major altcoins following suit; Solana experienced outflows of $7.4 million.

Nevertheless, short Bitcoin positions saw minor inflows totaling $2.3 million, suggesting some investors are positioning themselves for further downside.

Despite the overall negative sentiment, some digital assets saw inflows. Sui emerged as the best performer, attracting $15.5 million, while XRP followed with $5 million in inflows. These gains suggest that while the broader market is under pressure, certain projects continue to garner investor interest.

For XRP, the sentiment remains bullish, steered by increasing anticipation of a US SEC (Securities and Exchange Commission) decision on an XRP ETF. The deadline for the SEC to approve or reject certain ETF applications has begun, and investors remain hopeful that XRP will gain regulatory clarity. Including XRP in Trump’s crypto reserve in the US could further enhance this sentiment.

Notwithstanding, the latest round of outflows follows a concerning trend that developed over the past few months. The previous week saw crypto outflows of $508 million, further exacerbating investor fears. Prior to that, the Federal Reserve’s hawkish rhetoric and concerning Consumer Price Index (CPI) data had triggered the first major crypto outflows of 2025, with $415 million exiting the market.

This series of outflows has led some analysts to point to macroeconomic factors as the primary driver of the selloff, with investor sentiment still showing fear.

However, others argue that external policies like President Donald Trump’s tariffs have been contributing to the uncertain market environment, heightening inflation fears and making risk assets like crypto less attractive. A competing perspective suggests that structural shifts, including cash and carry trading strategies, may also be influencing Bitcoin’s recent volatility.

As of this writing, Bitcoin was trading for $93,095, up by over 8% since Monday’s session opened.

Conclusion

In summary, the ongoing outflows from the crypto market signal a significant shift in investor sentiment, driven by a combination of security concerns, macroeconomic factors, and changing regulatory landscapes. With Bitcoin and Ethereum facing substantial losses, the future of digital assets will largely depend on improved sentiment and market stability.