- Global crypto investment products saw net outflows of $508 million last week, extending a two-week decline to $924 million.
- Bitcoin faced the largest withdrawals, while XRP, Solana, and Ethereum recorded inflows despite market caution.
For the second week, global crypto fund products by institutions including Fidelity, BlackRock, and Grayscale experienced significant outflows. According to CoinShares, redemptions amounted to $508 million, following last week’s redemptions of $416 million.
Last week’s redemptions stood in contrast to 18 weeks of inflows, where, in total, $29 billion entered. Analysts attribute the fall to investor caution in response to economic uncertainties.
The recent U.S. presidential inauguration saw fears of potential trade tariffs, inflation, and monetary policy shifts. The cautiousness is evident in the sharp fall in the volume of trade, dropping to $13 billion last week, compared to $22 billion two weeks ago.
Regionally, the U.S. saw most of the withdrawals, where $560 million departed the market. Europe, on the contrary, continued to receive inflows, and Germany and Switzerland saw inflows of $30.5 million and $15.8 million, respectively.
Bitcoin Takes A Hit While Altcoins Gain Support
Bitcoin was in focus, reporting $571 million in redemptions. Short Bitcoin products saw inflows of $2.8 million. The trend is a sign of diminished confidence in where Bitcoin is headed in the short term in light of weakening market momentum.
However, altcoins did something unique. The leading gainer in inflows was XRP, reporting inflows of $38.3 million, following up on their accumulation pattern, which began in mid-November. The ongoing interest in XRP is apparently motivated by rumor that ultimately, the SEC may lose their current case against Ripple.
Other altcoins saw strong inflows, including Solana, which attracted $8.9 million; Ethereum, which saw inflows of $3.7 million; and Sui, which attracted $1.47 million. The consistent interest in altcoins is a testament to investors’ preference to diversify their holdings despite the overall market decline.
On-Chain Data Shows Declining BTC Activity
Market sentiment for Bitcoin dipped after on-chain data revealed declining investor activity. According to Alphractal, 90-day active supply, a crucial determinant of demand, for Bitcoin is declining.
90-Day Active Supply: A Metric of Demand and Sentiment in the Bitcoin Market
The 90-day Active Supply refers to the BTC transacted at least once in the last 90 days up to the end of that period. It’s generally a good way to assess demand and interest from new money, as… pic.twitter.com/9251g09iae
— Alphractal (@Alphractal) February 23, 2025
Historically, a fall in this figure implies fewer and fewer newcomers entering the market. If the trend continues, either price consolidation for Bitcoin or price drops might follow.
CryptoQuant also saw activity on the Bitcoin network dwindle. The number of active accounts and transactions has gone down, which is in line with historical correction phases.
In addition, accumulation in Bitcoin spot ETFs is also on the decline, and some have recorded small net outflows. A decrease in UTXOs also signals lower on-chain activity, consistent with what happened in the September 2023 correction.
Investor sentiment has been disrupted by macroeconomic uncertainties, such as geopolitical uncertainties and the absence of clear leadership by the new U.S. administration.
The optimism following Trump’s presidential victory initially drove the surge in Bitcoin, but bull strength has dissipated due to the lack of clear regulatory certainty and economic incentives.
For Bitcoin to regain strength, the market needs to have fresh catalysts. If uncertainty lingers, an ongoing consolidation pattern like in early 2024 might unfold. Or, if conditions improve, recovery in confidence by investors might fuel Bitcoin’s subsequent breakout.