$812 million capital flight! U.S. macro data becomes the "encryption killer," but XRP and SOL attract capital against the trend.

Global encryption investment products experienced a massive outflow of $812 million last week, according to CoinShares' latest report, which indicates that this was primarily driven by strong economic data from the United States that weakened expectations for interest rate cuts. However, this capital flight shows a distinct regional difference: the U.S. market saw an outflow of $1.04 billion, while Switzerland, Canada, and Germany achieved net inflows. More notably, while Bitcoin and Ethereum funds suffered significant losses, Solana and XRP funds bucked the trend, attracting inflows of $291 million and $93.1 million, respectively. Experts believe this is related to market expectations for the upcoming U.S. ETF.

Encryption market facing capital outflow: Macroeconomic data becomes the key trigger factor

(Source: CoinShares)

According to the latest weekly report released by asset management company CoinShares, global encryption investment products experienced a net outflow of $812 million last week, marking one of the largest single-week outflows in recent times. This outflow primarily occurred in encryption investment products managed by major asset management companies such as BlackRock, Bitwise, Fidelity, Grayscale, ProShares, and 21Shares.

CoinShares research director James Butterfill pointed out in the report that the main reason for the recent outflow of funds is that U.S. macroeconomic data has been stronger than market expectations, particularly the revised GDP and durable goods orders data. This data indicates that the U.S. economy remains strong, which in turn weakens market expectations that the U.S. Federal Reserve will further cut interest rates twice this year.

"The strong performance of economic data has changed the market's expectations for monetary policy," said an unnamed cryptocurrency market analyst. "Investors originally expected the Federal Reserve to lower interest rates two more times before the end of the year, but now that expectation is weakening, leading to some funds being withdrawn from risk assets."

Annual capital inflow remains strong

Despite the large-scale capital outflow last week, from a longer-term perspective, the inflow of funds into encryption investment products remains strong. Butterfill emphasized in the report: "Nevertheless, the cumulative inflow of funds is still quite substantial, with $4 billion inflowing so far this month and $39.6 billion year-to-date, maintaining momentum that could potentially match last year's record of $48.6 billion."

This data indicates that although short-term market sentiment is influenced by macroeconomic factors, institutional investors' long-term interest in encryption assets remains strong. The robust capital inflows in the first three quarters of 2025 reflect the increasing recognition of encryption assets as a diversification tool in investment portfolios by institutional investors.

Regional Divergence: Pessimistic in the United States, Optimistic in Europe

CoinShares' data reveals an intriguing phenomenon: the funding flow of cryptocurrency investment products shows significant regional differences. The U.S. market experienced a net outflow of $1.04 billion, becoming the main source of capital flight. In contrast, cryptocurrency funds in Switzerland, Canada, and Germany realized net inflows of $126.8 million, $58.6 million, and $35.5 million, respectively.

"This data indicates that negative sentiment is primarily concentrated in the US market," Butterfill noted in the report, "while investors in Europe and Canada appear to maintain a more optimistic attitude towards encryption assets, which may reflect the differences in macroeconomic outlook and monetary policy expectations across different regions."

This regional differentiation may be related to the regulatory environment in different areas, the structure of institutional investors, and the overall acceptance of encryption assets. Europe and Canada are often seen as having clearer and more favorable regulations regarding encryption assets compared to the United States, which may be one of the reasons for the continued strong inflow of funds in these regions.

Bitcoin and Ethereum funds suffer heavy losses

From the perspective of specific asset classes, Bitcoin funds have become the main source of capital outflow, losing 719 million USD last week. According to data compiled by The Block, US spot Bitcoin exchange-traded funds alone saw an outflow of 897.6 million USD, with Fidelity's FBTC product suffering the largest loss at 737.8 million USD.

Butterfill noted in the report: "Importantly, the demand for short-term Bitcoin investment products has not increased correspondingly, which suggests that negative sentiment may lack conviction and is likely only temporary." This observation indicates that investors have not shifted funds from long-term Bitcoin products to short-term speculative products, but have instead chosen to temporarily withdraw from the market.

Ethereum products have also been severely impacted, with $409 million in capital withdrawn last week, including a loss of $795.8 million for the U.S. spot Ethereum ETF. This data reflects the pressure Ethereum is facing during the recent market adjustment, which may be related to its relatively high valuation and the uncertainty regarding future network upgrades.

Solana and XRP rise against the trend: ETF expectations become a key driver

While Bitcoin and Ethereum funds are experiencing significant losses, Solana and XRP funds are showing remarkable resilience, not only resisting the overall downward trend of the market but also achieving significant capital inflows. According to data from CoinShares, Solana and XRP funds attracted net inflows of $291 million and $93.1 million respectively last week.

Butterfill believes that this phenomenon may be related to market expectations for the upcoming US ETF. "The strong capital inflow into the Solana and XRP funds likely reflects investors' expectations that these two encryption assets will soon receive approval for US ETFs," he stated in the report. "This expectation is driving investors to position themselves in advance, hoping to gain potential returns once the ETFs are officially launched."

· The institutionalization process of Solana accelerates

Solana funds attract a massive inflow of $291 million, highlighting the growing appeal of this blockchain platform among institutional investors. As a major competitor to Ethereum, Solana has gained market recognition for its high throughput and low transaction fees, especially in the DeFi and NFT sectors.

"The rapid development of the Solana ecosystem and its increasing acceptance among institutional investors have made it a strong candidate for ETF products," said a portfolio manager at a cryptocurrency asset management firm. "Investors are positioning themselves in advance, anticipating that the launch of the Solana ETF will further enhance its market position and liquidity."

· Clarity in XRP regulation brings confidence

The inflow of $93.1 million into the XRP fund is also noteworthy, especially considering the regulatory uncertainty that XRP has faced for a long time. This shift is largely attributed to the positive developments in the legal dispute between Ripple and the U.S. Securities and Exchange Commission (SEC), which has brought greater clarity to the regulatory status of XRP.

"The regulatory environment for XRP is becoming clearer, which provides greater confidence for institutional investors to participate," commented a legal expert focused on encryption regulation. "As regulatory barriers decrease, the likelihood of an XRP ETF has greatly increased, which is precisely the main reason we are seeing inflows of funds."

Market Outlook: Short-term Volatility and Long-term Optimism Coexist

According to the report and market analysis from CoinShares, the fund flows of encryption investment products reflect the fluctuations of short-term market sentiment, but the long-term trend remains positively upward.

"The capital outflow last week was mainly a short-term reaction to macroeconomic data, rather than a fundamental questioning of the long-term outlook for encryption assets," said a strategy analyst from an asset management company. "The strong capital inflow of $39.6 billion year-to-date indicates that institutional investors' interest in encryption assets continues to grow, and this trend is likely to persist in the coming quarters."

Key Observations for the Coming Weeks

Investors and market analysts will closely monitor the following key factors that may influence the flow of funds into encryption investment products in the coming weeks:

U.S. Economic Data: Employment reports, inflation data, and consumer confidence indices to be released in the coming weeks will significantly impact market expectations regarding the Federal Reserve's monetary policy.

Federal Reserve Officials Speak: Public remarks from Fed Chairman Powell and other officials may provide clues about the future interest rate path.

ETF Approval Progress: The ETF approval progress of Solana, XRP, and other encryption assets will directly affect the fund flows of related funds.

Institutional Participation: The participation and public stance of large institutional investors will influence market sentiment.

Regulatory Developments: The global developments in encryption regulation, particularly the regulatory trends in the United States, will continue to impact investor confidence.

Conclusion: Investment Opportunities in Market Adjustment

CoinShares' latest report reveals the complex dynamics of the encryption investment products market: on one hand, macroeconomic factors have led to short-term capital outflows; on the other hand, the clear differentiation between different regions and asset classes suggests that this is more of a market rebalancing rather than a systemic withdrawal.

For investors, this market environment presents both challenges and opportunities. Short-term volatility may lead to price adjustments, but long-term trends still point towards a continued influx of institutional funds into the encryption asset space. In particular, the strong performance of assets such as Solana and XRP indicates that the market is shifting from being solely dominated by Bitcoin and Ethereum to a more diversified portfolio.

As the cryptocurrency ETF ecosystem continues to expand and institutional participation increases, the market for cryptocurrency investment products is likely to continue maturing and developing, providing investors with more diversified investment options and higher market efficiency.