Crypto Exodus Hits $1.7 Billion but Tokenized Metals Draw Investor Inflows

Investor sentiment towards digital property has taken a decisive flip decrease, with crypto funds recording $1.7 billion in weekly outflows final week.

It marks a second consecutive week of withdrawals and reversing year-to-date inflows right into a web $1 billion outflow.

Investors Turn Defensive as Short Bitcoin and Tokenized Metals Attract Capital

After $1.73 billion outflows from crypto funds the week ending January 23, digital asset funding merchandise misplaced $1.69 billion final week. The newest pullback has additionally accelerated a broader contraction in property below administration (AuM).

Since peaking in October 2025, complete AuM throughout digital asset merchandise has fallen by $73 billion. This displays each sustained worth weak point and chronic capital flight from the sector.

CoinShares analyst James Butterfill factors to a mix of things behind the downturn. The head of analysis cites:

• The appointment of a extra hawkish US Federal Reserve Chair
• Ongoing whale promoting is tied to the four-year crypto cycle and
• Heightened geopolitical volatility has pushed traders towards safer property.

It explains why outflows have been overwhelmingly concentrated within the US, which accounted for $1.65 billion of the overall weekly withdrawals.

“We consider this displays a mix of things, together with the appointment of a extra hawkish US Federal Reserve Chair, continued whale promoting related to the four-year cycle, and heightened geopolitical volatility,” wrote Butterfill.

The scale of the US exodus highlights the sensitivity of crypto markets to shifts in Federal Reserve expectations and broader monetary situations. Elsewhere, sentiment was equally detrimental, albeit on a smaller scale.

Broad-Based Outflows Highlight Defensive Shift in Crypto Markets

Across particular person property, the sell-off was broad-based. Bitcoin bore the brunt of the withdrawals. It shed $1.32 billion over the week as traders decreased publicity to the pioneer crypto, doubtlessly explaining the BTC price slump.

Ethereum adopted with $308 million in outflows, reflecting waning confidence even in property usually considered as long-term structural bets.

In the identical method, latest market favorites weren’t spared as XRP and Solana recorded outflows of $43.7 million and $31.7 million, respectively.

The above chart indicators a rotation away from higher-beta positions. Yet amid the gloom, pockets of defensive positioning emerged. Short Bitcoin funding merchandise attracted $14.5 million in inflows, pushing year-to-date AuM up 8.1%.

The transfer suggests merchants are more and more hedging towards additional draw back somewhat than positioning for a near-term rebound.

At the identical time, so-called Hype funding merchandise stood out as a uncommon vivid spot, drawing $15.5 million in inflows. These merchandise benefited from a surge of on-chain exercise linked to tokenized precious metals, which seem like gaining traction instead store-of-value narrative amid crypto market stress.

Taken collectively, the newest circulate information factors to a market in defensive mode. With capital persevering with to exit core property and solely area of interest segments attracting inflows, investor habits suggests warning is firmly in management.

Whether sentiment stabilizes will probably rely on key US economic events this week, a slowdown in large-holder selling, and a discount in geopolitical dangers. These components stay unsure within the close to time period.

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