Crypto ETPs See Record $2.9B Outflows, Bitcoin Takes the Hardest Hit

Cryptocurrency exchange-traded products (ETPs) have faced the largest weekly sell-off in history, with a staggering $2.9 billion in outflows reported last week. This marks the fourth consecutive week of outflows, bringing the total to $3.8 billion in just a month. According to European investment firm CoinShares, this sharp decline in crypto ETPs can be attributed to a combination of factors, including the $1.5 billion Bybit hack, hawkish rhetoric from the U.S. Federal Reserve, and a massive $29 billion buying spree over the previous 19-week inflow streak.

Contributing Factors to the Outflow

CoinShares’ research head, James Butterfill, outlined several key reasons behind the record-breaking outflows. The Bybit hack, which saw $1.5 billion in assets stolen, has certainly shaken investor confidence. Additionally, more aggressive monetary policies from the U.S. Federal Reserve, particularly its hawkish stance, have created a less favorable environment for risk assets like cryptocurrencies. The extended period of inflows, culminating in the $29 billion surge, likely led to profit-taking, further weakening sentiment within the crypto market.

Bitcoin Suffers the Heaviest Losses

As the largest asset in the crypto ETP space, Bitcoin was hit the hardest, accounting for $2.6 billion of the total outflows last week. Its month-to-date (MTD) flows also showed a significant decline, dropping by $3.2 billion. In a rare twist, short Bitcoin ETPs saw minor inflows of $2.3 million, signaling a shift in market sentiment toward bearish positions on the flagship cryptocurrency.

Sui Emerges as the Biggest Winner

While the overall market sentiment has been weak, some altcoins have bucked the trend. Sui, a lesser-known blockchain project, emerged as the biggest winner among crypto ETPs, recording $15.5 million in inflows last week. XRP-based ETPs also saw healthy inflows, attracting $5 million. Despite the broader market's downturn, these assets managed to garner investor attention, indicating pockets of optimism within the crypto space.

Ether Faces Minor Setbacks

Ethereum (ETH), the second-largest cryptocurrency by market capitalization, wasn’t spared from the outflow wave. ETPs based on Ether saw $300 million in outflows last week, although its MTD inflows remained positive at $490.3 million. This suggests that while there is some caution surrounding Ether, its position in the market continues to attract long-term investors.

ETP Assets Under Management Take a Hit

The massive outflows have significantly impacted the total assets under management (AUM) in crypto ETPs. After reaching an all-time high of $173 billion in January, AUM has now fallen to $138.8 billion, marking a notable decline. The latest sell-off has raised questions about the sustainability of the crypto market's recent rally, with many investors likely waiting for signs of stability before re-entering the market.

Conclusion

The record-breaking outflows from crypto ETPs highlight the challenges facing the cryptocurrency market in 2025. While Bitcoin bears the brunt of the sell-off, altcoins like Sui and XRP show that investor interest is still present, albeit in specific areas. With the market facing headwinds from both internal challenges, like the Bybit hack, and external factors, such as the Federal Reserve's monetary policy, it remains to be seen how the market will recover. Investors will likely be keeping a close eye on upcoming developments in both the regulatory and economic landscape to gauge the next move for crypto assets.