Crypto investment products faced a significant downturn recently, experiencing their second-largest weekly outflow of 2026 by the end of May. Investors withdrew a staggering $1.67 billion from digital asset funds, driven by escalating geopolitical tensions and a prevailing risk-off sentiment in the market, as reported by CoinShares.
These withdrawals marked the third consecutive week of net outflows, bringing total redemptions over the past three weeks to $4.21 billion. CoinShares attributed the withdrawals to concerns surrounding Iran, which have overshadowed any optimistic sentiment stemming from recent advancements on the CLARITY Act, a U.S. legislation aimed at establishing a more structured framework for the crypto market.
The decline in investments is reflected in the assets under management across these digital asset products, which plummeted to $141 billion from $148 billion the previous week—representing the lowest level since early April.
This sharp decline in outflows coincided with a notable drop in crypto prices. Bitcoin hovered close to the $70,000 mark on Monday after reports indicated that Iran had halted discussions with the United States in response to Israel’s ongoing actions in Lebanon. During this turbulent period, Strategy (MSTR), the largest holder of Bitcoin, made headlines by selling portions of its holdings, despite its executive chairman Michal Saylor’s previous commitments not to do so. Bitcoin’s value reportedly declined by about 3% within a 24-hour timeframe, further intensifying the downward pressure on digital asset investment products.
The United States was predominantly responsible for last week’s outflows, with investors withdrawing $1.63 billion from crypto funds. In comparison, Germany, which had previously managed to evade major sell-offs, experienced $25.7 million in withdrawals. Sweden and Hong Kong also recorded outflows of $6.6 million and $4.5 million, respectively.
When focusing on Bitcoin investment products, they suffered the most significant losses, with $1.44 billion being withdrawn. CoinShares noted that this was the largest weekly outflow for Bitcoin in 2026, eclipsing not only the previous week’s losses but also the peak recorded during January’s market sell-off. Year-to-date, Bitcoin inflows have dramatically fallen to $1.19 billion, a stark decline from $2.6 billion a week earlier and $3.9 billion just two weeks ago.
Ethereum funds were similarly affected, logging $257.3 million in outflows. Meanwhile, the demand for alternative cryptocurrencies dwindled, with only five digital assets enjoying inflows exceeding $1 million, down from 11 assets three weeks prior. XRP led the way with inflows of $20.3 million, followed by Hyperliquid (HYPE) at $10.8 million and Near at $7.6 million.
Despite this recent pullback and the deteriorating market sentiment, crypto investment products still maintain approximately $142 billion in assets globally. This figure highlights the substantial amount of institutional capital that remains committed to the sector, even amidst the current challenges facing the cryptocurrency market.
