Digital asset investment products continue to struggle as investors pull capital out for the fourth week in a row. CoinShares reported on Feb 16 that total weekly outflows reached $173 million, pushing the cumulative four-week withdrawals to $3.74 billion.
The week showed sharp mood swings. It started with inflows of $575 million, suggesting some early optimism. That tone quickly reversed after markets weakened further, triggering $853 million in outflows. By Friday, sentiment improved slightly when CPI data came in weaker than expected, helping bring in US$105 million.
However, trading activity was significantly slower. ETP volumes decreased to $27 billion, which is much lower than the record of $63 billion set last week. This is an indication of a cautious market where investors are not so keen on taking risks.
Source: CoinShares
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Regional Split Shows US Selling While Others Accumulate
Flows between regions were also distinct. The United States recorded the largest outflows, amounting to $403 million. On the other hand, other regions combined recorded inflows of $230 million.
Germany recorded inflows of $115 million, followed by Canada with $46.3 million and Switzerland with $36.8 million. This indicates that US investors are quickly reducing risk, while institutions in other areas see the current weakness as an opportunity to invest.
Source: CoinShares
Bitcoin had the weakest sentiment, with a loss of $133 million. Notably, even short Bitcoin products experienced outflows, amounting to $15.4 million in the last two weeks.
CoinShares observed that this trend has usually been seen around market troughs, as traders start closing their bearish positions instead of adding to them.
Source: CoinShares
Ethereum was also under pressure, with $85.1 million withdrawn from its investment products. Hyperliquid experienced smaller outflows of around $1 million. However, XRP, Solana, and Chainlink continued to be bright spots. XRP attracted $33.4 million, Solana saw $31 million, and Chainlink added $1.1 million.
Bitcoin On-Chain Data Signals Rising Bear Market Stress
CryptoQuant raised another level of concern by stating that Bitcoin’s Adjusted SOPR has moved back to the 0.92-0.94 region. This region has been a point of deep correction in both 2019 and 2023, when coins were being spent at a loss.
When aSOPR is below 1, it indicates that investors are selling their coins at a loss. Several cycle lows were made in the 0.92-0.93 region in previous bear market cycles.
Source: CryptoQuant
CryptoQuant indicated that this is not like a mid-cycle correction, where aSOPR recovers above 1 quickly. If Bitcoin doesn’t get back above 1.0 soon, it could indicate that the market is transitioning from a correction to a bear market.