Bitcoin Funds Bleed $264M Weekly as Altcoins Lure Fresh Capital

Money's on the move. While Bitcoin-focused investment products just posted their worst weekly outflow in months, capital is quietly shifting gears—pouring into a select group of alternative cryptocurrencies.

The Great Rotation

Forget a broad-based rally. This isn't about the whole market going up. It's a tactical reallocation. Investors aren't fleeing crypto; they're hunting for the next narrative. The $264 million exit from Bitcoin funds signals a classic risk-on pivot within the digital asset space. When the king coin consolidates, the court jesters get their moment.

Where the Smart Money's Going

It's not a scattergun approach. Inflows are concentrating on protocols with clear catalysts—upcoming network upgrades, booming DeFi ecosystems, or simply a chart that hasn't yet gone parabolic. This is capital chasing alpha, not just beta. It's a sign of a maturing market where investors differentiate between digital gold and digital growth stocks.

The Bullish Takeaway

Let's be clear: this rotation is healthy. It prevents bubble-like conditions from forming in a single asset and spreads conviction—and liquidity—across the ecosystem. It shows sophisticated players are here to stay, playing the cycles. The total crypto market cap isn't collapsing; the pieces are just being reshuffled. A little volatility keeps the traditional finance tourists away—and their fees with them.

Crypto prices rebound after sharp selloff

The moderation in outflows coincided with a rebound in crypto prices following last week’s sharp selloff, during which bitcoin fell to a nearly 16-month low of $62,822 and recovered to around $70,500, according to CoinGecko data.

Currently, the leading digital asset is trading at  $70,437after after last week’s sharp sell-off and subsequent rebound. It is down roughly 44% from its all-time high north of $126,000 set last October, when forced liquidations and whale sales triggered a crypto winter.

Selling intensified last week, with the token posting its worst daily drop since November 2022. “The current bitcoin price action is a mere crisis of confidence. Nothing broke, no skeletons will show up,” Bernstein analyst Gautam Chhugani said in a note on Monday morning.

“In an AI world, Bitcoin and crypto are not interesting enough,” Chhugani said, adding that the “Bitcoin bear case is the weakest in its history.”

He also pointed out that spot ETFs have seen only a 7% outflow compared with a 50% correction in bitcoin prices during last week’s sell-off.

Despite the slowdown, sustained withdrawals pushed total crypto fund assets under management down to $129.8 billion. This is the lowest level since March 2025, when the TRUMP administration announced a new round of tariffs.

At the same time, exchange-traded product (ETP) trading volumes hit a record $63.1 billion last week. This increase is in stark contrast with the trend of spot crypto markets. In a note to investors, 10x Research said trading volumes during the recent crash were significantly lower than those seen in October, indicating thinner liquidity and activity driven more by derivatives than by broad market participation.

Analysts are split between bearish risks and long-term Bitcoin bulls

Looking ahead, 10x Research remains cautious, pointing out that its altcoin model has been bearish since mid-January and warning that most altcoins remain structurally weak. On prediction market Myriad, users assign just a 10% probability to an “alt season” occurring in the first quarter of the year.

Similarly, sentiment toward Bitcoin is mixed. Myriad users consider a 56% probability that Bitcoin’s next significant shift will be toward $55,000 — not $84,000 — and 10x Research suggests any recovery below $91,000 WOULD likely be a countertrend bounce. 

More bearish voices persist, with Bloomberg Intelligence strategist Mike McGlone reiterating that Bitcoin could eventually decline to $10,000, citing pressure on highly speculative assets in a tightening environment.

Even so, long-term bulls are hanging steady. CryptoMondays founder Lou Kerner reaffirmed his forecast, stating in the Quantum Economics blog that Bitcoin could hit $1 million by 2031.

Butterfill cautioned about short-term market volatility, noting that such a massive price drop is often accompanied by fund defaults or stress events that have been largely invisible to date.

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