Cryptocurrency funds lose $446 million in a single week, XRP ETF defies the trend to attract investment and becomes the market focus

According to the latest fund flow report released by CoinShares, digital asset investment products experienced a net outflow of $446 million last week, bringing the total cumulative outflows since mid-October to $3.2 billion. However, the market is not entirely bleak; recently approved XRP and Solana exchange-traded funds demonstrated strong capital attraction, with inflows of $70.2 million and $7.5 million respectively, contrasting sharply with the continued redemptions of Bitcoin and Ethereum products.

This significant divergence among assets reveals that institutional funds are strategically rotating during the market adjustment, shifting from mature mainstream assets to alternative assets with event-driven potential. Although the overall capital inflow since the beginning of the year remains at $46.3 billion, with only a 10% increase in assets under management, it indicates that retail investors’ actual gains after net flows are limited, and market sentiment remains fragile.

Global Fund Flow Panorama: Are Institutions “Pulling Back” or “Rebalancing”?

The net outflow of $446 million last week undoubtedly cast a shadow over the year-end crypto market. CoinShares’ report clearly states that this is not an isolated weekly event but a continuation of a multi-month outflow trend since mid-October, with total withdrawals reaching $3.2 billion. This persistent selling pressure occurs against a seemingly contradictory backdrop: although Bitcoin hit an annual high of nearly $125,100 in October, institutional funds do not seem to be consolidating at the high; instead, they are taking profits or shifting positions. This phenomenon prompts us to consider whether institutional investors are generally bearish on the future or if this is merely a deep rebalancing of positions.

Looking at the full year, we see a more revealing picture: total inflows of $46.3 billion, close to the $48.7 billion annual record in 2024. However, another key indicator—the total assets under management—has only grown by 10% since January. The “decoupling” of these two data points is crucial for understanding current market sentiment. It suggests that large inflows are largely offset by large outflows, creating a “high turnover, low net growth” scenario. For retail investors participating through these funds, such high-frequency capital movements may dilute actual returns, explaining why market enthusiasm did not ignite significantly after Bitcoin reached new highs, instead appearing somewhat exhausted and cautious.

Regarding the current market phase, Bitwise’s Chief Investment Officer Matt Hougan offers a long-term perspective. In an interview with CNBC, he described the current Bitcoin outlook as “a long upward trend with lower volatility.” He further elaborated: “I believe we are in a 10-year period of strong, slow growth.” Hougan emphasized that, compared to previous cycles with over 60% deep corrections, the sustained buying by institutional investors in this cycle provides a cushion against downside risks. This view implies that the current price consolidation and capital outflows may not mark the start of a bear market but rather a healthy correction within a long-term bull market, with institutional presence providing stronger support at the market bottom.

Regional Divergence: Major Outflows from the US, Germany “Smart Money” Quietly Accumulating

A deeper analysis of geographic fund flows reveals significant regional differences among global investors, often serving as clues to the “smart money” movements. The report shows that last week’s outflows were heavily concentrated in the US market, totaling $460 million, representing the largest share of global outflows. This is closely related to recent fluctuations in US macroeconomic data, regulatory uncertainties, and the traditional year-end tax-loss harvesting strategies. As the largest crypto market globally, the US’s concentrated withdrawal has a decisive impact on global sentiment.

In contrast, Europe presents a more complex and divided picture. Switzerland saw a modest redemption of $14.2 million last week, continuing its cautious stance. Meanwhile, Germany became a bright spot, attracting $35.7 million in new inflows against the trend. More importantly, throughout December, German investment products accumulated inflows of $248 million. This persistent buying sharply contrasts with ongoing selling in North America, suggesting fundamental differences in how investors in these regions view current valuations and future prospects.

German investors’ contrarian behavior is often interpreted as a strategic accumulation signal. When prices retreat from highs and market sentiment turns pessimistic, long-term capital tends to buy in tranches at relatively low valuations. Germany, as Europe’s economic engine, is known for rational and long-term investing. Their continued buying may indicate that, in the eyes of professional investors, current price levels offer medium- to long-term allocation value. These regional fund flow differences reflect varying risk appetites and may also foreshadow different sources and strengths of capital returning during future market rebounds, offering a unique perspective on the market bottom structure.

Asset Performance Diverges: XRP, Solana ETFs Surge, Bitcoin and Ethereum Under Pressure

Against the backdrop of overall capital outflows, asset classes are performing in stark contrast—highlighting intense capital rotation. Last week, XRP and Solana ETFs were the market stars. XRP products saw an astonishing $70.2 million inflow, and Solana products attracted $7.5 million. This is no coincidence; since their debut in the US market in mid-October, XRP-related products have accumulated $1.07 billion, and Solana ETFs have reached $1.34 billion. This sustained strong inflow sharply contrasts with the bearish sentiment surrounding other assets.

The driving force behind this strength is a strong event-driven narrative. The launch of XRP and Solana ETFs has opened a direct investment channel for institutional funds that prefer or are only able to invest through compliant ETF structures. Essentially, this is an incremental capital injection from “0 to 1.” Many investors see this as a bet on the revaluation of these assets amid new regulatory and product cycles. Conversely, Bitcoin and Ethereum ETF markets are crowded, and the story has moved into a “from 1 to N” phase, with diminishing short-term appeal for incremental capital. Data confirms this: last week, Bitcoin products saw outflows of $443 million, and Ethereum products lost $59.5 million; since mid-October, Bitcoin ETFs have lost $2.8 billion, and Ethereum ETFs $1.6 billion.

XRP and Solana ETF Capital Flow Key Data

To better understand the scale and trend of this capital rotation, here are key figures since mid-October ETF launches:

XRP-related investment products:

• Last week inflow: $70.2 million

• Since mid-October cumulative inflow: $1.07 billion

• Market position: With the new ETF narrative, it has become one of the most attractive alternative assets recently.

Solana-related investment products:

• Last week inflow: $7.5 million

• Since mid-October cumulative inflow: $1.34 billion

• Market position: As a high-performance blockchain, its ETF has attracted significant technical-faith institutional capital.

Bitcoin-related investment products (for comparison):

• Last week outflow: $443 million

• Since mid-October cumulative outflow: $2.8 billion

• Market stage: Transitioning from incremental narrative to stockpile, facing profit-taking pressure.

Ethereum-related investment products (for comparison):

• Last week outflow: $59.5 million

• Since mid-October cumulative outflow: $1.6 billion

• Market challenge: Without major catalysts like spot ETFs, capital attraction is temporarily lagging.

A noteworthy case is BlackRock’s iShares Bitcoin Trust. Despite Bitcoin dropping about 30% from October highs, this fund still attracted $25 billion in net inflows this year, ranking sixth among all ETFs for annual capital inflow, despite negative returns. Since launch, it has accumulated about $62.5 billion in net inflows, far surpassing competitors. Bloomberg ETF analyst Eric Balchunas pointed out that if this fund can raise $25 billion in a relatively weak year, its upside potential in a bull market could be even greater. This again confirms that for top-tier institutional products, capital inflows can decouple from short-term price performance, driven by longer-term asset allocation needs.

Market Structure Indicates Extended Consolidation: Wave Theory’s Outlook? Staking Dynamics Show New Turn

The current technical market structure also supports the view of “extended consolidation.” As of the report, Bitcoin’s trading price hovers around $87,800, trapped between a key support at $85,000 and stubborn resistance at $93,000. Analysts describe this narrow oscillation as Bitcoin’s “weakest year-end performance in seven years.” Derivatives data supports this: according to QCP Capital, due to risk-reduction trades at year-end, open interest in Bitcoin and Ethereum perpetual contracts decreased overnight by $3 billion and $2 billion respectively, with many leveraged traders exiting the market. This suppresses short-term volatility but also accumulates energy for future directional moves.

For future paths, Ledn’s CIO John Glover offers a specific Elliott wave-based forecast. In an interview with Cryptonews, he expects continued volatility, with prices possibly dropping to the $71,000–$84,000 range to form the Wave 4 bottom, followed by a Wave 5 rally targeting $145,000–$160,000. “Once Wave 4’s bottom is clearly established—likely sometime in Q1 or Q2 2026—I would expect a rebound to $145K–$160K in 2026/2027,” Glover said. He added that only a drop below $69,000 would alter his forecast. This technical analysis provides a potential timeline and price roadmap, though its accuracy remains to be validated by the market, offering an important reference.

Meanwhile, Ethereum’s on-chain fundamentals show a noteworthy positive shift. Staking activity has reversed significantly, with new inflows surpassing withdrawals for the first time in six months. Currently, about 745,619 ETH are queued for staking, while 360,518 ETH are in withdrawal queues. This reversal marks a stark contrast to recent months when staking withdrawals exceeded deposits. If this trend continues into early 2026, it could ease Ethereum’s ongoing sell pressure. More ETH being locked in staking contracts reduces circulating supply and enhances network security—long-term positive fundamentals that could underpin Ethereum’s future performance.

In-Depth Analysis: Why Is XRP ETF Becoming a Market Favorite?

To understand why XRP investment products have attracted over $1 billion against the trend, we need to explore “what is an XRP ETF” and the narrative behind it. Unlike Bitcoin ETFs that mainly track spot prices, the currently approved XRP financial products in the US are more accurately structured as futures-based or trust-based investment vehicles, but they also provide a compliant channel for traditional finance to invest in XRP. The core driver is the “regulatory breakthrough” narrative. XRP had been mired in uncertainty due to a long-standing lawsuit by the US SEC, and approval of related financial products is widely seen as a major positive signal toward regulatory clarity, greatly easing institutional compliance concerns.

Second, XRP and its parent company Ripple have long focused on cross-border payments and settlement services for financial institutions, with relatively clear use cases and established partnerships (e.g., collaborations with multiple international banks). For institutional capital seeking “real-world utility” and “enterprise adoption” stories, XRP offers a differentiated investment target from pure digital store of value (Bitcoin) or decentralized application platforms (Ethereum). Its narrative aligns with transforming traditional financial infrastructure, which, in the macro context of CBDCs and real-time settlement, has certain appeal.

Finally, from a market dynamics perspective, XRP lagged in previous bull markets, with valuations at relatively low levels. After Bitcoin and Ethereum ETFs were fully priced in, capital naturally sought the next potential undervalued asset with high revaluation prospects. The launch of XRP financial products provides a perfect outlet for this risk-seeking, narrative-chasing segment. This “chasing new” and “catch-up” psychology has driven continuous inflows. However, investors should also note that XRP’s price performance remains highly dependent on Ripple’s business developments, regulatory evolutions, and overall crypto market risk appetite.

Market Microscope: Why Are Fund Flows a Critical Market Sentiment Indicator?

For retail investors, understanding weekly fund flow reports of crypto funds is key to gauging the “institutional pulse” and sentiment. These data are important because they provide tangible, unforgeable evidence of actual trading behavior. Unlike social media sentiment, analyst opinions, or technical indicators, fund inflows and outflows directly reflect real asset allocation decisions and risk preferences of institutions. Persistent net inflows suggest accumulation, while persistent net outflows may indicate profit-taking or risk aversion.

Second, fund flow data help identify the movements of the “smart money.” As discussed, Germany’s continued inflow amid overall outflows exemplifies this. Institutions typically have stronger research, more timely information, and longer investment horizons. Their collective behavior often leads retail markets. Analyzing subtle changes in regional and asset class fund flows can preempt shifts in market style or major trends—for example, rotation from Bitcoin to altcoins often first appears in these fund data.

Finally, these data are effective tools for assessing market stages and health. In a healthy bull market, rising prices accompanied by inflows indicate new capital entering, pushing prices higher. Conversely, “rising prices with shrinking inflows” or “falling prices with increasing outflows” are warning signs of waning momentum or potential problems. The current paradox of “high total inflows but low net asset growth” reveals internal divergence and high turnover, suggesting the market may not be in a clear trend but in a complex consolidation phase. Combining price charts with fund flow data provides a more comprehensive and reliable basis for investment decisions.