Cryptocurrency investment products recorded over $1 billion in net outflows last week as geopolitical uncertainty and rising inflation rattled investor confidence, snapping a six-week streak of inflows.
Digital asset exchange-traded products (ETPs) saw $1.07 billion in net withdrawals for the week, the third-largest weekly outflow recorded so far in 2026, according to data from CoinShares’ latest weekly report.
Bitcoin and Ether take the hardest hit
Bitcoin investment products bore the brunt of the sell-off, with $982 million flowing out of BTC-focused funds. Ether was not far behind, recording $249 million in outflows, its steepest single-week withdrawal since the week ending January 30.
The US was the primary source of the capital flight, with American investors pulling a net $1.14 billion from crypto funds. European markets told a different story, Switzerland, Germany, and the Netherlands each posted modest inflows, suggesting the risk-off sentiment was more concentrated in US-based institutional players.
Altcoins bucked the trend
Not all digital assets suffered. XRP investment products attracted $67.5 million in fresh inflows, while Solana funds drew in $55.1 million, both holding firm despite the broader pullback.
CoinShares head of research James Butterfill attributed the resilience in select altcoins to improving regulatory sentiment in the United States, particularly following progress on the CLARITY Act in the Senate.
What spooked the market
The outflows coincided with a broader risk-off move across global markets, with the S&P 500 pulling back from all-time highs. The primary catalyst: mounting tensions around the Strait of Hormuz, one of the world’s most critical shipping corridors for oil, following uncertainty over whether a US-Iran ceasefire would hold.
Disruptions to oil supply through the strait have pushed energy prices higher, contributing to a renewed surge in US inflation now sitting at its highest level in over three years. Investors responded by trimming exposure to higher-risk assets, with crypto funds among the first to feel the pull.
CLARITY Act offers a silver lining
Despite the short-term turbulence, the regulatory outlook offered some optimism. The CLARITY Act, the landmark crypto market structure bill that would establish a clearer federal framework for digital assets, advanced out of the Senate Banking Committee last week with bipartisan support.
Crypto Council for Innovation CEO Ji Hun Kim said the momentum around the legislation remains strong, describing progress through Congress as both fast-moving and encouraging for the industry.
However, the bill is not without friction. Several Senate Democrats are pushing for stronger ethics provisions, specifically targeting elected officials’ financial ties to the crypto sector. Republican Senator Thom Tillis acknowledged that “more work remains in the weeks ahead” to refine the legislation before it advances further.
Despite last week’s heavy outflows, both Bitcoin and Ether ETP products remain positive on a year-to-date basis, a signal that institutional appetite for crypto hasn’t fundamentally reversed, even if short-term nerves are showing.
