Key Takeaways
- Europe digital asset ETF flows turned negative during the peak of volatility in January but recovered.
- Uncertainty around rates and global liquidity is driving bitcoin’s volatility.
- Bitcoin remains at its lowest level since 2024.
Bitcoin has sold off since late January, with double-digit losses reigniting concerns about volatility and briefly triggering ETF outflows. Those outflows have proven short-lived, at least in Europe.
European crypto ETF flows were positive in the last two weeks, suggesting investors are undeterred by bitcoin’s dramatic declines during February so far.
While the longer-term trend of crypto ETF inflows was interrupted by a week of outflows in the final week of January, right when the bitcoin selloff began to steepen, positive flows returned in February, with two consecutive weeks of net inflows even as bitcoin and other major cryptocurrencies showed little sign of rebounding. Just EUR 33.5 milllion in outflows during the last week of January have been more than offset by nearly EUR 200 million in the two weeks since, for a total of EUR 340 million in inflows this year.
The brief pull-back in flows during late January pales in comparison to EUR 206 million in outflows during last November, which had accompanied a similar decline in the bitcoin price as this year’s.
Why Has Crypto Sold Off?
Bitcoin is currently trading below USD 70,000, down more than 20% since the start of the year. This follows a spike between 2023 and 2025 when prices went from below USD 20,000 to a record high of above USD 120,000 in October of last year.
Long-term cryptocurrency investors should be accustomed to such high volatility. Just during 2025, dramatic one-day declines in bitcoin included a drop of 14.7% on March 3, 12.3% on Oct. 10, and 8.7% on Nov. 4.
“Crypto was touted as a safe-haven and a diversifier from more traditional assets. What we are learning, however, is the correlation to other assets, like equities and bonds, is higher than people originally believed,” says Michael Field, chief European markets strategist for Morningstar.
“This is not to say that investors have given up on bitcoin, but that those who expected it to go up in a straight line are having to rethink their expectations,” he adds.
According to Stephen Dover, chief market strategist and head of Franklin Templeton Institute, macro conditions remain the primary driver of the crypto selloff.
“Uncertainty around interest rates, global liquidity, and geopolitics continues to weigh on all risk assets. Crypto often reacts first to these shifts because it trades 24/7 and carries higher embedded leverage than traditional markets.”
Dover also says that “while some selling was clearly forced and technical in nature, it does not appear to reflect a widespread loss of conviction across institutional investors.”
“Rather than capitulating, institutions have focused on tightening risk controls, trimming gross exposure, and prioritizing liquidity and quality,” he adds.
But Crypto ETF Outflows Continued in the US
In the United States, the behavior of crypto investors has been markedly different from those in Europe, even taking into account the vast difference in the size of crypto ETF assets and flows.
The reversal in US ETF flows was dramatic: The week ending Jan. 16 saw more than USD 2 billion invested in crypto ETFs, but this was matched by a comparable amount of outflows in the week ending Jan. 23 as bitcoin once more began to decline. Since then, US flows have remained negative, in contrast to the rapid return to positive flows seen in Europe.
Combining flows data for both markets shows the vast difference in their overall magnitude. On a year-to-date basis, combined US and European digital asset ETF flows remain clearly negative.
