$1 billion flood returns to crypto funds, ending five-week hemorrhage of $4 billion

CoinShares reported a weekly turnover of $1 billion, driven by Bitcoin purchases and renewed investor appetite in major markets.

Investment products linked to digital assets recorded net inflows of $1 billion last week, reversing a five-week outflow of $4 billion. CoinShares said no single macro event explains the change. Instead, previous price softness, technical breakdowns and renewed buying activity among major Bitcoin holders seem to have supported the recovery.

Market participants have recently focused more on identifying buying opportunities than mitigating their exposure.

Rebuilding global crypto funds

According to the latest edition of CoinShares’ Digital Asset Fund Flows Weekly Report, weekly fund flows were dominated by Bitcoin, which gained $881 million. At the same time, short-term Bitcoin products attracted $3.7 million. Ethereum attracted $117 million, its strongest weekly performance since mid-January, although both assets remain in net outflows for the year.

Solana, on the other hand, posted $53.8 million for the week and $156 million to date. Chainlink gained $3.4 million last week, while XRP and Sui added $1.9 million and $0.4 million, respectively. Multi-product was the only segment to see a withdrawal, coming in at $6 million.

In the region, sentiment was mostly consistent. The United States leads the way with $957 million in new investment. Canada, Germany, and Switzerland added $34.1 million, $31.7 million, and $28.4 million, respectively. Hong Kong recorded $6.8 million, while Brazil grossed $3.2 million.

Geopolitical shock

As ETFs have been trending for the past week, there has been a sharp deterioration in geopolitical conditions. Crypto markets are largely limited on Monday amid heightened geopolitical tensions, particularly in Iran. An initial U.S. attack on Iran over the weekend pushed Bitcoin to around $63,000 and Ethereum below $2,000 before prices returned to their normal trading range.

About $300 million of long positions were liquidated at press time, a significant amount but including what QCP Capital said showed positions had already been reduced in the days leading up to the event. The firm noted that it could also mean investors treat Bitcoin less as a “weekend macro hedge” and consider alternatives such as pegged gold, which trades 24/7 and sees greater risk appetite.

You may also like:

Options markets showed very short-term volatility but otherwise reacted moderately, indicating that traders are relatively well-positioned for potential volatility given the warning signs over the past week. QCP pointed to a similar incident last June when BTC plunged on geopolitical news but recovered and rallied later. Options flow data also revealed buyers of call contracts due to expire in March, suggesting some participants are ready for a recovery.

“While price action appears to be quite constructive, we remain cautious as tensions and uncertainty continue. The conflict is still in its early stages and it is premature to conclude whether it will abate or evolve into a wider regional confrontation involving other Gulf states.”