Digital Asset Funds Face $223M Outflow Amid Hawkish Fed and Strong U.S. Data

Last week, digital asset investment products experienced a net outflow of $223 million, marking the first such outflow in 15 consecutive weeks of inflows [1]. This development signals a shift in investor sentiment, as the flow of capital into digital assets, which had remained steady for nearly four months, appears to have paused. The previous streak of inflows had reflected growing institutional interest and broader acceptance of digital assets as part of diversified portfolios.

The outflow was concentrated in the latter half of the week, following a strong start of $8.83 billion in inflows. This reversal coincided with a hawkish Federal Open Market Committee (FOMC) meeting and a series of stronger-than-expected U.S. economic data releases, which contributed to a general risk-off sentiment in markets [1]. On Friday alone, outflows exceeded $1 billion, highlighting the heightened sensitivity of the digital asset market to macroeconomic signals.

Bitcoin was the hardest hit, absorbing outflows of $4.04 billion during the week. Despite this, cumulative inflows for the year still stand at $20 billion, reflecting the ongoing appeal of the leading cryptocurrency [1]. In contrast, Ethereum continued to show resilience, recording net inflows for the 15th consecutive week, with $1.33 billion in total inflows. Smaller altcoins also saw positive flows, with XRP, Solana, and SEI receiving $31.2 million, $8.8 million, and $5.8 million, respectively. Aave and Sui added to the positive trend with inflows of $1.2 million and $0.8 million [1].

The reversal of capital flows underscores the market's exposure to macroeconomic volatility and the influence of central bank policy on investor behavior. While this week’s outflow does not represent a long-term trend, it marks a significant inflection point after a sustained period of inflows. Analysts will need to monitor the situation closely to determine whether this is an isolated incident or the beginning of a broader shift in investor appetite for digital assets.

The market’s mixed performance highlights the complex interplay between macroeconomic factors and asset-specific demand. Investors may be recalibrating risk exposure in light of evolving economic data and policy expectations, particularly with the Federal Reserve’s stance remaining a key point of uncertainty. The ability of digital assets to maintain investor interest amid such volatility will depend on continued innovation, regulatory clarity, and macroeconomic stability.

Source: [1] Last week, digital asset investment products saw an outflow of $223 million, marking the first outflow in 15 weeks (https://www.theblockbeats.info/en/flash/305814)