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Jimmy Aki
Author
Jimmy Aki
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Why Trust Cryptonews
Key Takeaways:
- Investors are rapidly exiting crypto ETPs as market uncertainty intensifies.
- Bitcoin faces the harshest sell-off, reflecting widespread risk aversion.
- A few alternative assets are drawing interest, signaling potential shifts in market focus.
- Broader economic and security concerns are fueling a cautious reallocation from digital assets.
Crypto exchange-traded products (ETPs) saw record outflows of $2.9 billion last week, marking the largest weekly sell-off on record, according to CoinShares.
This marks the third consecutive week of outflows, bringing total withdrawals to $3.8 billion over this period, according to CoinShares’ March 3 report.
Bitcoin Leads Crypto ETP Outflows as Ethereum, Solana, and Ton Take Hits
In a blog post, CoinShares, a leading European crypto investment firm, attributed the mass sell-off to several key factors.
These include the $1.4 billion Bybit hack, hawkish comments from Federal Reserve Chair Jerome Powell, and profit-taking after a 19-week inflow streak that brought in $29 billion.
These factors contributed to investor sell-offs and weakened sentiment in the crypto market.
James Butterfill, head of research at CoinShares, noted that Bitcoin bore the brunt of this negative sentiment, suffering $2.59 billion in outflows last week.
Meanwhile, short Bitcoin ETPs attracted $2.3 million in inflows, reflecting increased bearish bets against Bitcoin.
Ethereum was not spared from the sell-off, recording about $300 million in outflows—the largest weekly outflow in its history.
CoinShares data as of February 28 also showed that Solana recorded $7.4 million in outflows, while Ton suffered $22.6 million in withdrawals.
However, Sui was the only major crypto ETP to see strong inflows, leading with $15.5 million.
XRP-based ETPs followed closely with $5 million in inflows, signaling selective investor confidence in certain altcoins despite broader market turbulence.
Regional Trends and Historical Context of Crypto ETP Flows
The U.S. led the outflows among crypto ETP asset managers, shedding $2.87 billion.
Switzerland and Canada followed with $73 million and $16.9 million in outflows, respectively.
In contrast, German investors saw the market downturn as a buying opportunity, making the country the only region with substantial inflows exceeding $55 million.
Consequently, total assets under management (AUM) in crypto ETPs dropped to $138.82 billion, down from a historical high of $173 billion in January.
The market surge earlier this year coincided with speculation about a U.S. government crypto reserve following comments attributed to former President Donald Trump.
This is not the first time crypto ETPs have experienced mass outflows.
In December 2024, U.S.-based spot Bitcoin ETFs saw over $1.5 billion in outflows over a four-day streak.
However, despite these downturns, crypto ETPs have historically benefited from strong inflows.
CoinShares’ data indicates that 2024 saw $44.5 billion in inflows, more than four times the total recorded in any previous year.
Bitcoin alone accounted for $11.5 billion, while Ethereum experienced a seven-week streak that brought in $3.5 billion.
CoinShares’ data indicates that 2024 saw $44.5 billion in inflows, more than four times the total recorded in any previous year.
Bitcoin alone accounted for $11.5 billion in inflows, while Ethereum enjoyed a seven-week streak of $3.5 billion in inflows.
Bitcoin’s Price Reaction and Key Macro Events Ahead
Bitcoin’s price fell sharply following the record ETP outflows, hitting a four-month low of $78,197 on February 28—down 27% from its all-time high of over $109,000.
However, Bitcoin bulls mounted a strong recovery, with BTC/USD surging by $10,000 in a single day to trade in the $93,000 range.
This resurgence followed former President Donald Trump’s apparent confirmation of the proposed strategic crypto reserve, shifting market sentiment toward long-term recovery prospects.
Upcoming macroeconomic events could add further volatility to the crypto market.
Investors will be watching key U.S. employment data, including jobless claims on March 6 and the jobs report on March 7, for signals on economic health.
Federal Reserve Chair Jerome Powell’s speech later this week may also provide guidance on future monetary policy, shaping sentiment across risk assets, including cryptocurrencies.
Frequently Asked Questions (FAQs)
Investors cite rising economic uncertainty, shifting regulatory views, and cybersecurity issues as key reasons for the outflow. Heightened risk and evolving asset strategies prompt a reallocation from crypto ETPs.
The retreat from ETPs could trigger lower liquidity and increased volatility across digital asset markets. Reduced institutional backing may amplify price swings and shift investor focus to alternative tokens.
The inflows into certain altcoins indicate investors are seeking diversification amid stress. This selective interest may signal a shift toward assets viewed as offering stronger growth and stability.
