Crypto Funds Experience $1.17B in Outflows Amid Market Volatility

Institutional interest in cryptocurrency assets took a downturn last week, resulting in a significant $1.17 billion in outflows from digital asset investment products. This marks the second consecutive week of losses, as both market volatility and economic uncertainties continue to plague investors.

Key Takeaways

Digital asset products faced outflows totaling $1.17 billion for a second week in a row.
Bitcoin and Ethereum exchange-traded funds (ETFs) saw the highest redemptions, with $1.22 billion and $508 million outflows, respectively.
In spite of substantial selling by institutions, Bitcoin's price managed to rise 4.4%, briefly exceeding $106,000.

Recent data shows that trading volumes in exchange-traded products (ETPs) remained strong at $43 billion, although investor sentiment is still fragile, especially after a liquidity crisis on October 10.

A brief surge in market optimism surrounding the potential resolution of the U.S. government shutdown quickly subsided, prompting another surge in withdrawals by the end of the week.

Crypto Funds Experience $1.17B in Outflows Amid Market Volatility

U.S. Market Dominates Outflows while Germany and Switzerland See Inflows

The U.S. market was responsible for the bulk of the losses, tallying up to $1.22 billion in outflows. Meanwhile, Germany and Switzerland went against the trend, reporting inflows of $41.3 million and $49.7 million, respectively.

Bitcoin was the primary asset impacted, experiencing $932 million in outflows over the past week. Conversely, short Bitcoin ETPs gained $11.8 million, their best week since May 2025. Ethereum also struggled, with $438 million in outflows.

Despite the overall bearish sentiment, some altcoins demonstrated resilience. Solana topped the list with inflows of $118 million, accumulating a total of $2.1 billion over the last nine weeks. Other projects like HBAR ($26.8 million) and Hyperliquid ($4.2 million) also attracted investor interest, indicating a continued fascination with emerging blockchain ecosystems amid a cautious wider market.

As reported, U.S. spot Bitcoin ETFs faced substantial redemptions last week, recording $1.22 billion in outflows, which marks the third-largest weekly withdrawal ever noted, as per SoSoValue. On Friday alone, outflows reached $558.4 million, the most significant single-day loss since August, while Ethereum ETFs suffered losses of $508 million.

Leading these withdrawals were BlackRock’s IBIT, followed by Fidelity’s FBTC and Grayscale’s GBTC funds. Despite these institutional sell-offs, Bitcoin's price increased by 4.4%, briefly surpassing $106,000. This indicates that retail activity and demand in the spot market remain robust, even as institutional players reduce their holdings.

Factors such as inflation concerns, potential central bank interest rate hikes, and geopolitical tension have sparked a risk-averse mood across all markets.

Bitcoin Surges Above $106K Amid Government Shutdown Optimism

Optimism surrounding a possible resolution to the U.S. government shutdown provided a lift to risk sentiment across global markets, allowing Bitcoin to bounce back to $106,000 after previously dipping below the critical $100,000 mark, according to QCP Capital's latest report.

The firm observed that despite ongoing outflows from spot ETFs and selling pressure from long-term holders, Bitcoin participated in a general relief rally alongside equities.

The data also hinted at a declining demand for protection against downside risks, suggesting decreased fears of another significant liquidation event.

QCP compared this recent trend of long-term holders selling to similar past instances, such as the Silk Road and Mt. Gox events, indicating that the richer market liquidity has enabled these supply shocks to be absorbed without disrupting the overall structural momentum.

The firm highlighted that Digital Asset Treasuries remain a crucial sentiment driver, although their activity has been limited in this tight trading environment.

While Bitcoin's decisive bounce back from the $100K level provides some technical support, QCP anticipates the cryptocurrency will continue to trade within a defined range for the foreseeable future. A movement beyond the $118K threshold might lead to renewed selling pressures from long-term holders unless there is a substantial improvement in macroeconomic conditions and ETF inflows.