In the latest wave of sell-offs, investors pulled a staggering $795 million from crypto funds last week, marking the third consecutive week of outflows. According to CoinShares’ weekly asset flows report, Bitcoin (BTC) experienced the largest losses, with $751 million in withdrawals, while Ethereum (ETH) saw $37.6 million exit the market.

This prolonged decline is largely attributed to growing fears surrounding tariffs and macroeconomic uncertainty, particularly concerns about upcoming Federal Reserve actions.

Tariff and Fed Fears Weigh on Crypto Sentiment

The report highlights that recent tariff uncertainty is dampening investor sentiment toward digital assets, prompting a shift away from riskier assets like cryptocurrencies. “Digital asset investment products saw a third consecutive week of outflows as recent tariff activity continues to weigh on sentiment,” the report explained. These ongoing concerns have overshadowed the crypto market, leading to significant withdrawals from major funds.

BlackRock’s iShares ETF products were hit particularly hard, with BTC and ETH ETFs collectively losing $342 million in the past week. Over the course of the month, BlackRock has seen nearly $412 million in outflows, signaling a steep decline in investor confidence.

XRP and Multi-Asset Funds Show Resilience

While the broader crypto market has been under pressure, XRP-based and multi-asset funds have defied the trend. XRP, in particular, saw $3.4 million in inflows, making it one of the few digital assets to experience demand during the downturn. The overall month-to-date (MTD) flows for XRP stood at $1.5 million, signaling that investors are finding refuge in the asset despite broader market declines.

Additionally, multi-asset funds, which typically invest in a variety of crypto assets, also saw a boost, making them a popular choice for investors seeking diversification in uncertain times.

Grayscale and Solana-Based Products Also Experience Outflows

Grayscale’s products followed closely behind BlackRock’s offerings in terms of outflows, with $187 million pulled from the firm’s crypto investment products. Solana-based funds were also impacted, recording a $5.1 million outflow. However, the overall trend has been a stark contrast between the individual performance of assets like BTC, ETH, and XRP.

Despite the struggles of major assets, the inflows into multi-asset funds and XRP-based products suggest that some investors are turning to these relatively more stable options in the face of uncertainty.

Macro Concerns Could Extend the Downtrend

Looking ahead, some macro analysts are predicting that the decline in crypto investments could persist. Quinn Thompson, founder of the macro-focused hedge fund Lekker Capital, noted that a recent speech by Federal Reserve Chairman Jerome Powell could have a negative impact on risk assets, including cryptocurrencies.

Thompson explained, “Barring a collapse in economic data before then, Powell and Governor Waller prefer patience amidst the elevated uncertainty. This is good for bonds but bad for risk assets.” If the Fed continues with its cautious approach, it could spell more trouble for riskier assets like crypto in the coming months.

Conclusion: Will Crypto Market Rebound?

The current trend of outflows from crypto funds points to a more cautious sentiment among investors, with concerns over tariffs and upcoming Fed decisions taking center stage. While XRP and multi-asset funds have outperformed other crypto products, the broader market remains in a fragile state. If macroeconomic conditions continue to worsen, it could extend the sell-off in crypto investments, leaving investors on edge.

As the situation evolves, it remains to be seen whether crypto can recover, or if the uncertainty will continue to weigh heavily on investor sentiment throughout 2025.