Crypto Funds See $1.67B Outflow as Geopolitical Tensions Weigh on Market Sentiment

Crypto investment products recorded their second-largest weekly outflow of 2026 at the end of May, as investors withdrew $1.67 billion from digital asset funds amid escalating geopolitical tensions and a broader risk-off environment. According to CoinShares, the latest wave of redemptions marked the third consecutive week of net outflows, bringing total withdrawals over the past three weeks to $4.21 billion.

CoinShares noted that concerns surrounding Iran and rising instability in the Middle East overshadowed positive developments in U.S. crypto regulation, including progress on the CLARITY Act, a key market structure bill aimed at providing greater regulatory clarity for the digital asset industry.

As investor sentiment weakened, total assets under management (AUM) across crypto investment products fell to $141 billion, down from $148 billion the previous week and marking the lowest level since early April.

The outflows coincided with a sharp downturn in cryptocurrency prices. Bitcoin dropped toward the $70,000 level after reports emerged that Iran had suspended talks with the United States in response to Israel’s ongoing military activity in Lebanon. Market pressure intensified after Strategy (MSTR), the largest corporate holder of bitcoin, reportedly sold part of its holdings, despite long-standing statements from Executive Chairman Michael Saylor suggesting the company would not reduce its position.

The United States accounted for nearly all crypto fund withdrawals, with investors pulling $1.63 billion from digital asset products. Germany followed with $25.7 million in outflows, while Sweden and Hong Kong recorded withdrawals of $6.6 million and $4.5 million, respectively.

Bitcoin investment products experienced the largest losses, posting $1.44 billion in weekly outflows—the biggest bitcoin fund withdrawal recorded in 2026. Year-to-date bitcoin inflows have dropped significantly to $1.19 billion, compared with $2.6 billion a week earlier and $3.9 billion two weeks prior.

Ethereum funds also faced selling pressure, registering $257.3 million in outflows. Interest in altcoins weakened as well, with only five digital assets attracting more than $1 million in inflows. XRP led with $20.3 million in inflows, followed by Hyperliquid (HYPE) at $10.8 million and Near Protocol (NEAR) at $7.6 million.

Despite recent market weakness, global crypto investment products continue to hold approximately $142 billion in assets, highlighting the significant level of institutional participation that remains in the cryptocurrency sector even as market sentiment deteriorates.