Crypto Funds See First Outflow in 5 Weeks Amid Macro Fears

• Digital asset products experienced their first weekly outflow in five weeks, with $414 million exiting the market.
• Ether (ETH) recorded the highest individual losses at $222 million, while XRP saw a contrarian inflow of $15.8 million.
• Macroeconomic factors, including U.S. Federal Reserve rate hike fears and geopolitical tensions in the Middle East, have shifted investor sentiment toward risk-off strategies.

Market Reversal and Macroeconomic Drivers

After a month of consistent growth, the cryptocurrency investment landscape has pivoted sharply toward caution. Last week, investors withdrew a total of $414 million from digital asset products, marking a significant break from a five-week trend of positive inflows. This shift is primarily attributed to a deteriorating macroeconomic outlook, characterized by persistent inflation concerns and escalating tensions between Iran and other powers in the Middle East.

Market expectations for the June Federal Open Market Committee (FOMC) meeting have undergone a dramatic transformation. Previously, participants anticipated potential interest rate cuts; however, the narrative has now shifted toward possible rate hikes. This tougher monetary environment has diminished the appetite for high-risk assets like cryptocurrencies.

Assets Under Management and Sector Performance

Total assets under management (AUM) for the sector fell to $129 billion, returning to levels last observed in early February. James Butterfill, head of research at CoinShares, noted that these levels are broadly comparable to April 2025, echoing the market environment during the initial phase of the Trump tariffs.

The performance across specific digital assets was varied but mostly negative:

• Ether (ETH) led the decline with $222 million in outflows, resulting in a year-to-date net loss of $273 million, the weakest performance among major tracked assets.
• Bitcoin (BTC) saw $194 million in outflows, though it remains up by $964 million for the year overall.
• Short-Bitcoin products attracted $4 million in new capital, suggesting that a segment of investors is positioning for a further market downturn.
• Solana (SOL) recorded $12.3 million in withdrawals, while XRP stood out with $15.8 million in fresh inflows.

Impact on Crypto Exchange-Traded Funds

The cooling sentiment was notably evident in the exchange-traded fund (ETF) sector. Spot Bitcoin ETFs ended a strong four-week streak of growth, recording $296 million in net outflows last week. This follows a period of heavy accumulation earlier in the month when inflows surpassed $2.2 billion. Similarly, Spot Ether ETFs continued to face pressure, recording $206.6 million in outflows for the second consecutive week.