Crypto Outflows Approach $3 Billion as Market Sentiment Dips

Recent trends in the cryptocurrency market highlight a significant selling pressure, as digital asset investment products have seen their most substantial weekly outflows to date. Last week alone, crypto outflows soared to a staggering $2.9 billion, accumulating a total of $3.8 billion over the past three weeks. This change is particularly notable after a robust 19-week streak of inflows that saw $29 billion enter the market.

Weak investor sentiment prevails with Bitcoin (BTC) struggling to maintain its value just above the psychological threshold of $90,000. This trend persists even amid President Donald Trump's crypto reserve policy, which has not succeeded in restoring confidence.

Unprecedented Outflows Recorded in Crypto Market

The latest report from CoinShares attributes these negative outflows to deteriorating market sentiment influenced by several factors, including the recent hacking incident at Bybit. This has significantly undermined investor confidence, highlighting vulnerabilities within the crypto sphere. Additionally, increased hawkishness from the Federal Reserve and broader macroeconomic anxieties have contributed to the prevailing gloom in the market.

“Various elements, including the Bybit hack, a stringent Federal Reserve approach, and 19 weeks of inflows totaling $29 billion, likely drove the exit of capital through profit-taking and diminished market trust,” states a section from the CoinShares report.

As the hack led to millions of dollars lost, crypto investors are increasingly wary of the inherent risks involved in these digital assets. The Federal Reserve's cautious outlook regarding inflation and GDP has further clouded the market, dampening risk appetite among investors.

Notably, Bitcoin emerged as the hardest-hit asset, suffering outflows amounting to $2.59 billion last week. Ethereum also posted significant losses with approximately $300 million departing from its value. Other altcoins were not spared either, with Solana losing approximately $7.4 million.

Despite the prevalent bearish sentiment, a few assets experienced capital inflows. Sui stood out as a strong performer, attracting $15.5 million, while XRP saw $5 million in inflows, driven by optimistic expectations around a potential SEC ruling on an XRP ETF.

Such developments regarding XRP have bolstered a more favorable sentiment among its investors, especially as the SEC's deadline to decide on various ETF applications is approaching. Furthermore, the inclusion of XRP in Trump's crypto reserve may provide an additional positive impetus.

This recent wave of outflows is concerning, following a trend that has developed over the past few months. The previous week, the crypto sector experienced outflows of $508 million, which heightened investor unease. Weeks before that, a $415 million exit from the market was attributed to the Federal Reserve's stern stance and disconcerting CPI data.

Some analysts suggest that macroeconomic factors are primarily fueling this selling pressure, with the current market sentiment reflecting significant fear.

Conversely, external policies - such as Trump's tariffs - might also be exacerbating the uncertainty in the market, elevating inflation fears and rendering risk assets like cryptocurrencies less appealing.

Looking at Bitcoin specifically, its recent performance reflects its volatility, influenced by dynamic trading strategies like cash and carry trading.