Crypto inflows fell significantly last week, dropping to $223 million, according to the latest report by CoinShares. Earlier in the week, digital asset products had seen inflows surge to $883 million, putting them on track to cross the $1 billion mark. However, this strong start was quickly reversed by mid-week developments in the US economy.
The sudden change in direction followed the Federal Open Market Committee (FOMC) meeting on Wednesday, alongside other economic indicators that surprised markets. The hawkish tone from the US Federal Reserve and stronger-than-expected economic data dampened risk appetite, resulting in a noticeable pullback from crypto investment products.
US Economic Signals Trigger Risk-Off Sentiment
CoinShares’ head of research, James Butterfill, linked the reversal to the FOMC’s stance and broader macroeconomic factors. “The week started strong, with $883 million in inflows, but this trend reversed in the latter half of the week, likely triggered by the hawkish FOMC meeting and a series of better-than-expected economic data from the US,” he stated.
While the early part of the week showed optimism, Friday saw a sharp downturn with nearly $1 billion in outflows from crypto-related investment vehicles. Analysts point out that this sell-off reflected a shift toward a more risk-averse stance among investors.
Interestingly, US job cut announcements rose sharply last week, jumping above the four-year average and more than doubling the typical July figure. Although weak payrolls data might normally hint at a dovish stance from the Fed, the initial market reaction appeared cautious, as investors weighed conflicting signals.
Bitcoin Outflows Mount as Ethereum Gains
Another key trend noted in the report is the diverging flow patterns between Bitcoin and altcoins. Bitcoin registered outflows of $404 million last week, more than double the $175 million in outflows seen the previous week. This decline highlights growing investor hesitation toward the leading cryptocurrency amid uncertain macroeconomic conditions.
Meanwhile, Ethereum led the altcoin pack with $133.9 million in inflows, continuing its steady performance and outperforming Bitcoin in the past two weeks. Other altcoins also saw positive flows, with XRP attracting $31.3 million and Solana pulling in $8.8 million.
This growing interest in altcoins may signal a broader market shift, though analysts caution that conditions remain fragile in the short term.
Profit-Taking and Market Shakeout in Play
In addition to macroeconomic concerns, Butterfill also pointed to profit-taking as a possible reason behind the drop in inflows. Over the past 30 days, the crypto market has seen net inflows of $12.2 billion, accounting for roughly half of the year’s total. This kind of surge often invites some degree of pullback as investors lock in gains.
Crypto Inflows Last Week. Source: CoinShares Report
QCP Capital analysts added that recent trends, including Bitcoin’s third consecutive Friday sell-off, indicate a broader market recalibration. The firm highlighted the impact of a weaker-than-expected jobs report and renewed US tariffs as contributors to the retreat in crypto markets.
Despite the turbulence, QCP analysts remain optimistic about the long-term outlook. “Despite the pullback, the broader structural setup remains intact,” they wrote. They believe the recent market action may have flushed out excess leverage, creating a healthier base for future growth and possibly setting the stage for an altcoin season later in the year.
Temporary Pause or Start of a Broader Shift?
While last week’s data presents a clear pause in the recent bullish crypto trend, many believe it’s too early to call it a full reversal. Macro data continues to play an outsized role in investor sentiment, and upcoming indicators particularly on inflation and employment will likely shape the next phase.
For now, the market appears to be in a cooling-off phase after a strong month of inflows. Whether this signals the start of a new trend or simply a breather in an ongoing rally will depend heavily on global economic signals and central bank policy in the coming weeks.
