Bitcoin Sees Significant Outflows Amid Interest Rate Concerns
Cryptocurrency exchange-traded products (ETPs) faced a major sell-off last week, marking the first significant outflows of 2025.
According to a report from CoinShares on 17 January, crypto ETPs recorded $415 million in outflows, with Bitcoin (BTC) leading the downturn at $430 million. However, the overall losses were mitigated by inflows into ETPs tracking alternative cryptocurrencies, including Solana (SOL), XRP, and Sui (SUI).
Macroeconomic Factors Drive Investor Caution
James Butterfill, head of research at CoinShares, attributed the outflows to macroeconomic concerns, particularly US Federal Reserve Chair Jerome Powell’s comments urging patience regarding interest rate cuts. Additionally, higher-than-expected US inflation data further dampened investor sentiment.
Weekly crypto asset inflows by the number of the week in late 2024 and early 2025 (in millions of US dollars). Source: CoinShares
“Bitcoin is highly sensitive to interest rate expectations and, as a result, bore the brunt of investor outflows,” Butterfill explained.
Despite this, there were no corresponding inflows into short-Bitcoin products, which instead saw outflows of $9.6 million, suggesting investors were repositioning rather than outright betting against Bitcoin.
End of 19-Week Inflow Streak
The past week’s sell-off ended a 19-week inflow streak for crypto ETPs, which had started amid optimism linked to the US presidential election.
Flows by assets (in millions of US dollars). Source: CoinShares
During this period, crypto investment products accumulated $29.4 billion—far surpassing the $16 billion recorded in the first 19 weeks following the launch of US spot Bitcoin ETFs in January 2024.
Altcoins Lead Inflows, With Solana and XRP on Top
While Bitcoin and Ether (ETH) ETPs experienced outflows—ETH recording $7.2 billion—several alternative cryptocurrencies saw notable inflows.
Solana was the biggest winner, attracting $8.9 million in new investments, followed closely by XRP with $8.5 million and Sui with $6 million.
Investor interest in Solana and XRP spiked amid growing optimism that the US Securities and Exchange Commission (SEC) may soon approve ETFs for these assets. Bloomberg ETF analysts Eric Balchunas and James Seyffart estimate a 75% chance of SEC approval for a Solana ETF in 2025, while XRP has a 65% likelihood of receiving regulatory clearance.
As regulatory developments continue to shape the market, investors are closely monitoring the potential for further ETF approvals and their impact on cryptocurrency investment trends.
