Digital Asset Funds See $454M Weekly Outflows as Fed Rate-Cut Hopes Fade: CoinShares

Core Insights - Digital asset investment products experienced $454 million in net outflows last week, indicating a significant reversal in investor sentiment that has erased early-year gains [1] - The outflows followed a four-day period where $1.3 billion was withdrawn, nearly negating the $1.5 billion inflows seen in the first two trading days of 2026 [1] Economic Context - The shift in sentiment is closely linked to diminishing expectations for a US Federal Reserve interest rate cut in March, as recent macroeconomic data suggests persistent inflation [2] - Initial investor optimism was driven by hopes of early monetary policy easing by the Federal Reserve, but stronger economic indicators and labor market data have led to a risk-off approach in digital asset investments [3] Market Dynamics - The majority of outflows were concentrated in the US, with US-listed products seeing $569 million withdrawn, contrasting with positive sentiment in non-US markets [5] - Germany led inflows with $58.9 million, followed by Canada at $24.5 million and Switzerland at $21 million, highlighting a divergence in investor behavior between the US and Europe [5] Asset-Level Withdrawals - Bitcoin saw the largest outflows, losing $405 million over the week, while short-Bitcoin products experienced $9.2 million in outflows, indicating mixed investor conviction [6] - Ethereum followed with $116 million in outflows, reflecting caution towards large-cap digital assets [7] Selective Inflows - Despite the overall risk-off sentiment, certain altcoins attracted fresh capital, with XRP leading inflows at $45.8 million, followed by Solana at $32.8 million and Sui at $7.6 million [8] - These inflows suggest selective positioning by investors into assets perceived to have stronger near-term catalysts amid macroeconomic uncertainty [8]