Last week, $1.07 billion flowed out of cryptocurrency exchange-traded products (ETPs), snapping a six-week stretch of inflows.

On May 18, blockchain media outlet Cointelegraph attributed the move to institutional investors reducing exposure to risk assets as geopolitical uncertainty combined with concerns about renewed U.S. inflation.

A weekly CoinShares report showed a net outflow of $1.07 billion from digital asset ETPs last week. The withdrawals were concentrated in bitcoin and ether products. Bitcoin investment products saw $982 million in outflows, while ether products recorded $249 million. For ether, it marked the largest weekly outflow since the week ended Jan. 30.

By country, outflows from the United States stood out. U.S. investors pulled $1.14 billion from related funds. Some European markets, including Switzerland, Germany and the Netherlands, posted small net inflows. As investors continued to cut exposure to risk assets broadly, sentiment diverged by region.

Some altcoin products showed a different trend. XRP investment products took in $67.5 million, and Solana products recorded $55.1 million of inflows. Weekly flows were mixed, but on a year-to-date cumulative basis, both bitcoin and ether ETPs remain in net inflow territory.

The outflows also coincided with moves in traditional financial markets. Late last week, the S&P 500 fell from near record highs, and investors focused on possible disruptions around the Strait of Hormuz, a key maritime route for global crude oil supply. Higher energy prices helped push U.S. inflation back to its highest level in more than three years.

Some altcoins reflected expectations of an improving U.S. regulatory environment. James Butterfill (제임스 버터필), head of research at CoinShares, said some altcoins benefited from improved regulatory sentiment after progress on the U.S. Clarity Act. The bill, which would clarify the U.S. digital asset regulatory framework, passed the Senate Banking Committee last week with bipartisan support.

The industry sees the bill as potentially reducing regulatory uncertainty and creating a more predictable legal environment. Jihoon Kim (김지훈), chief executive officer of the Cryptocurrency Innovation Committee, said, "Both momentum and progress are strong as the bill moves through Congress." Some Senate Democrats, however, are seeking stronger ethics provisions on financial conflicts of interest between elected officials and the crypto industry.

Republican Senator Thom Tillis also cited the need to refine the bill. He said, "There is still work left to do for the Clarity Act." The crypto market is expected to respond in the short term to Middle East developments and inflation data, while watching over the medium to long term how the Clarity Act debate may change fund flows.