Bitcoin funds face test as $1.7B exodus wipes out 2025 inflows

Crypto funds saw $1.7B in weekly outflows, flipping 2025 flows negative as Bitcoin ETFs trade below cost basis and short BTC, tokenized metals attract fresh demand.

Digital asset investment products recorded a second consecutive week of substantial outflows, erasing year-to-date gains and pushing net global flows into negative territory, according to a report from CoinShares.

The withdrawals totaled $1.7 billion and have fully reversed earlier inflows recorded in 2025, the report stated. Total assets under management across crypto investment products have declined significantly since peaking in October 2025.

The outflows occurred as markets responded to a more hawkish U.S. Federal Reserve outlook, large-holder distribution patterns linked to the four-year crypto cycle, and heightened geopolitical uncertainty, according to the report.

The United States accounted for the majority of outflows from listed products during the period, CoinShares reported. Canada and Sweden also recorded notable withdrawals, while Switzerland and Germany posted modest inflows.

Bitcoin (BTC) products led the decline in outflows, followed by substantial withdrawals from Ethereum products. XRP and Solana investment products also recorded outflows during the period.

Short Bitcoin products represented an exception, recording inflows and increasing assets under management year-to-date, suggesting demand for downside protection. Investment products focused on tokenized precious metals also attracted inflows amid increased on-chain activity.

Bitcoin outflows continue into February

Bitcoin traded below the average cost basis of U.S. spot Bitcoin exchange-traded funds following the second- and third-largest weekly outflows on record last month, according to research from Alex Thorn, head of research at Galaxy. The average Bitcoin ETF purchase is currently underwater, Thorn stated.

U.S. spot Bitcoin ETFs manage substantial assets and collectively hold a large amount of bitcoin, placing the average purchase price for ETF-held coins above current market levels.

The 11 U.S. spot Bitcoin ETFs recorded net redemptions over the past two weeks, according to data from Coinglass. The sustained withdrawals represent a reversal from strong inflows recorded late last year.

Total assets under management for spot Bitcoin ETFs have fallen notably from their October peak, while Bitcoin’s price declined significantly over the same period, Thorn reported. Cumulative ETF inflows remain only modestly below their peak, indicating limited capitulation by longer-term holders, according to the research.