Crypto investments saw a sharp decline last week, dropping to $527 million amidst turbulent market conditions. This significant downturn in inflows into digital asset investment products contrasts starkly with the substantial amounts recorded in the previous weeks.
The most recent report from CoinShares highlights that only $527 million flowed into crypto assets in the last week of January, indicating how wider market trends are impacting investor confidence. This marks a departure from the robust inflows witnessed in the weeks leading up to this period.
During the two preceding weeks, inflows surged to $1.9 billion and $2.2 billion, as reported by BeInCrypto. James Butterfill from CoinShares attributes the decrease in crypto inflows to the hype surrounding DeepSeek, an AI entity that disrupted liquidity in crypto and stock markets.
"Digital asset investment products received $527 million in inflows last week. However, intra-week movements reflected the volatile investor sentiment driven by broader market concerns, notably the impact of DeepSeek news, which triggered $530 million in outflows on Monday," according to excerpts from the report.
The buzz around China's AI platform led to a massive $530 million outflow on Monday. While the initial excitement over DeepSeek caused a dip in crypto inflows, the market recovered later in the week with over $1 billion in fresh inflows. Nevertheless, this was insufficient to maintain the previous trend of inflows close to the $2 billion mark seen in earlier weeks of January.
The sustained positive flows despite occasional setbacks suggest ongoing investor confidence in the crypto sector. Bitcoin (BTC) remained a popular choice, attracting $486 million in inflows last week.
Just a week ago, the enthusiasm surrounding DeepSeek led to $1 billion in crypto liquidations within a single day, intensifying industry uncertainty. The repercussions extended beyond digital assets to impact crypto miner stocks, AI-related equities like Nvidia, and AI tokens.
"DeepSeek is causing quite a stir," remarked Emily, a prominent user on X.
These comments mirror the pervasive uncertainty prevailing in the industry. Nevertheless, there are signs of recovery, particularly among AI agent coins which bounced back in response to the challenges faced by DeepSeek.
Apart from the setbacks linked to DeepSeek, broader economic issues such as trade tensions and US employment data could influence inflows into digital asset investment products in the upcoming week. As BeInCrypto reported, trade tensions arising from President Trump's tariffs have already triggered over $2 billion in liquidations, resulting in more than 730,000 traders facing significant losses on a single Monday.