Key Takeaways:
- Digital asset funds saw $1.47 billion in outflows in the week ending May 24
- Bitcoin products accounted for $1.3 billion of the total redemptions
- Rising Treasury yields and Middle East tensions drove the risk-off shift
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Digital asset funds bleed $1.47B as risk-off mood deepens
Digital asset investment products posted $1.47 billion in outflows last week, with Bitcoin products accounting for $1.3 billion of the redemptions.
Bitcoin led $1.47 billion in digital asset fund outflows in the week through May 24, extending a second straight week of redemptions as rising Treasury yields and geopolitical uncertainty dampened risk appetite.
"Investors are reducing exposure across the board as rising Treasury yields and geopolitical uncertainty push capital toward safer assets," James Butterfill, head of research at CoinShares, said.
Bitcoin products accounted for $1.3 billion of the total outflows, according to CoinShares data. Spot Bitcoin ETFs recorded $1.2 billion in net outflows over three consecutive sessions, with May on track to finish in negative territory after $727 million in net redemptions so far this month. The Coinbase Bitcoin Premium Index has remained negative for several weeks, signaling weaker demand from US retail and institutional investors relative to offshore markets.
The sustained outflows threaten to deepen Bitcoin's recent slide, with the largest cryptocurrency trading at $76,668 as of 12:00 UTC on Tuesday, down from levels above $80,000 earlier this month. The 30-year US Treasury yield's rise to its highest since 2007 has tightened financial conditions, reducing liquidity available for risk assets including cryptocurrencies.
Rising yields and Middle East tensions fuel risk-off shift
The macro backdrop has turned increasingly hostile for digital assets. US long-dated Treasury yields have climbed sharply, with the 10-year yield hovering near yearly highs and the 30-year yield trading at levels not seen in nearly two decades. Higher government bond yields tighten financial conditions by drawing capital away from speculative assets.
Markets are now pricing in a 65% probability of a 25-basis-point Federal Reserve rate hike before year-end, according to CME FedWatch data, a sharp reversal from the rate-cut expectations that prevailed earlier in 2026. Tighter monetary policy and higher real yields tend to reduce the liquidity environment in which risk-sensitive assets historically outperform.
Geopolitical risks have compounded the pressure. US military strikes launched on Southern Iran around the Strait of Hormuz on Monday, described by US Central Command as acts of "self-defense," have cast doubt on the prospects for a US-Iran peace agreement. The Crypto Fear & Greed Index stood at 34 on Tuesday, in Fear territory, reflecting persistent risk aversion among crypto investors.
Ethereum traded at $2,095 as of 12:00 UTC on Tuesday, while XRP changed hands at $1.34, both under pressure alongside Bitcoin. The broader digital asset market capitalization has declined as fund outflows and macro headwinds weigh on prices.
This article is for informational purposes only and does not constitute investment advice.
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