U.S. spot Bitcoin exchange-traded fund (ETF) investors are demonstrating unexpected resilience amid a four-month cryptocurrency downturn that has wiped out significant gains since the products launched in January 2024.
Bitcoin ETF holders are currently sitting on paper losses of approximately 42%, with the world’s largest cryptocurrency trading below $73,000. Despite these substantial losses, ETF analyst James Seyffart noted in a Wednesday X post that “the ETFs are still hanging in there pretty good.”
The resilience is evident in the net inflow data. Before October’s market decline, spot Bitcoin ETF inflows totaled around $62.11 billion.
Current preliminary data from Farside Investors shows inflows have fallen to approximately $55 billion, a decline of roughly $7 billion, but modest compared to the overall capital committed to the products.
“Not too shabby,” Seyffart remarked, underscoring that recent outflows represent a relatively small portion of the massive inflows that occurred during peak market conditions.
Investment researcher Jim Bianco provided additional context on investor positioning.
According to his analysis, the average spot Bitcoin ETF holder is currently 24% underwater but remains committed to their positions. This suggests that despite significant paper losses, most ETF investors are holding rather than capitulating to the downturn.
The extended decline marks a notable shift in ETF behavior. Crypto analytics account Rand highlighted in a Tuesday X post that this represents “the first time in history there have been three consecutive months of outflows” from Bitcoin ETFs.
Bitcoin’s spot price has declined 24.73% over the past month, trading near $70,537 as of the latest market data. The downturn follows a strong performance period for the asset in 2023 and 2024.
Some analysts argue that current market participants are overlooking longer-term performance trends. ETF analyst Eric Balchunas noted on January 28 that Bitcoin has gained over 400% since 2022, substantially outperforming traditional safe-haven assets. Gold has returned 177% over the same period, while silver has gained 350%.
“In other words, bitcoin spanked everything so bad in ’23 and ’24 (which people seem to forget) that those other assets still haven’t caught up even after having their greatest year ever and BTC being in a coma,” Balchunas said.
The sentiment among crypto analysts has shifted noticeably. CryptoQuant CEO Ki Young Ju commented in a Wednesday X post that “every Bitcoin analyst is now bearish,” referring to the challenging market conditions and widespread pessimism across the sector.
The resilience shown by ETF holders stands in contrast to broader market sentiment. While outflows have occurred and losses mount, the relatively modest redemptions compared to earlier inflows suggest institutional investors and ETF holders maintain conviction in their Bitcoin positions despite the prolonged downturn.
If you’re reading this, you’re already ahead. Stay there by joining
Dipprofit’s private Telegram community.
Discover more from Dipprofit
Subscribe to get the latest posts sent to your email.
