US Spot Bitcoin ETF Holders Hold Firm Despite Four-Month Downtrend

Key Insights:

• Bitcoin ETF holders suffer massive paper losses but exhibit limited panic selling.
• Net inflows remain high despite three consecutive months of ETF outflows.
• Analysts caution that bearish sentiment could miss out on Bitcoin’s long-term gains.

US-based spot Bitcoin ETF investors are showing considerable resilience, despite a prolonged Bitcoin price decline. Analysts say ETF holders have absorbed heavy paper losses without causing mass exits. The data suggests conviction remains stronger than the outflows headlines might suggest.

ETF Holders Stay Invested Through Drawdown

U.S. spot Bitcoin ETF holders are “still hanging in there pretty good,” despite recent losses, ETF analyst James Seyffart said. Bitcoin has fallen below $73,000, causing ETF investors to experience their worst drawdown since the launch of products in January 2024. On a paper basis, losses now stand around 42%.

Even then, Seyffart said, the scale of recent outflows is still small compared to earlier inflows. Before the market downturn in October, cumulative net inflows into the US spot Bitcoin ETFs totaled around $62.11 billion. Preliminary data from Farside Investors indicates that the figure is now close to $55 billion.

From Seyffart’s perspective, the difference reflects trimming rather than panic selling. He called the situation “not too shabby,” considering the magnitude of Bitcoin’s price drop. In his view, ETF holders seem willing to endure volatility rather than give up their positions outright.

Average ETF Investor Sits Continues Holding

Investment Researcher Jim Bianco gave more context on investor positioning. In a post on X, Bianco said the average spot Bitcoin ETF holder is about 24% underwater. Despite this, he noted that investors are “collectively holding,” reinforcing the idea of patience rather than capitulation.

This behavior contrasts with previous crypto cycles, where sharp corrections have often led to sharp exits. By their nature, ETFs appeal to a different type of investor. Many holders allocate through brokerage accounts or retirement vehicles, which are more inclined to hold for longer.

The nature of ETFs may also minimize emotional trading. Unlike perpetual futures or leveraged products, spot ETFs do not face the risk of liquidation. That enables investors to ride out drawdowns without having to sell out, even if sentiment turns negative.

Outflows Extend as Bitcoin Price Plunges Further

However, the pressure has been constant. Crypto analytics account Rand pointed out that the market has now experienced three consecutive months of net outflows from spot Bitcoin ETFs. According to Rand, this is the first time such a streak has happened.

The prolonged outflows coincide with a significant decline in Bitcoin’s spot price. Over the last 30 days, Bitcoin has dropped about 28.27%, trading near $67,207 at the time of writing, according to CoinMarketCap data. The decline has weighed on sentiment in the retail and institutional segments.

Source: CMC

Despite this, outflows have been gradual rather than sudden. Analysts said large redemptions are often indicative of panic or forced rebalancing. The current pattern instead points to gradual risk reduction as investors reconsider exposure amid macro uncertainty.

Analysts Say Investors are Missing the Bigger Picture

Some market observers believe that the bearish tone reflects short-term thinking. ETF analyst Eric Balchunas said many Bitcoin investors are “very short-sighted.” As a counterweight to recent weakness, he pointed to Bitcoin’s longer-term performance.

“Since 2022, Bitcoin has remained up over 400%,” Balchunas said. In the same time period, gold has increased approximately 177%, and silver has increased approximately 350%. In his opinion, Bitcoin’s massive gains in 2023 and 2024 have skewed expectations, and the current consolidation feels worse than it is.

Balchunas said that even after gold and silver had good years, they have not fully recovered from Bitcoin’s earlier-year surge. He said that frustration does not come from structural damage to Bitcoin but rather from recency bias.

While ETF holders seem to be holding steady, analyst sentiment has turned very bearish. Ki Young Ju said that “every Bitcoin analyst is now bearish,” representing the mood all across social media and research desks. Such consensus pessimism has historically coincided with late-stage corrections.

For now, ETF flows provide a counterargument to that narrative. Although redemptions have continued, the majority of capital remains invested. This indicates that many holders view the drawdown as part of Bitcoin’s overall volatility cycle.

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