Bitcoin ETF Investors Find Themselves at a Loss as Prices Decline

Bitcoin’s swift decline has resulted in the average investor in U.S. spot Bitcoin exchange-traded funds (ETFs) now facing losses, marking the first time since their inception.

The flow-weighted cost basis for all U.S. Bitcoin ETFs is approximately $89,600, a threshold exceeded by Bitcoin earlier this week, plunging many investors into negative returns. Glassnode analyst Sean Rose informed Bloomberg that some initial investors, especially those who bought in when Bitcoin was priced between $40,000 and $70,000, still retain profits.

“Despite the average ETF cost basis surpassing the current price, the majority of ETF holders are long-term investors, hence being underwater does not lead to immediate sell-offs,” stated Vincent Liu, the Chief Investment Officer at Kronos Research, during an interview with Cointelegraph.

Translation: “Despite the average ETF cost basis surpassing the current price, most ETF holders are long-term investors, so being underwater doesn’t trigger quick exits.”

He continued, indicating that in this aversion-to-risk climate, liquidity and macroeconomic factors are crucial. Tight financial conditions can exacerbate losses, while indications of easing can provide relief.

Bitcoin Trading Bitcoin is currently trading around $89,500. Source: CoinMarketCap

Withdrawals from Bitcoin and Ether ETFs

On Monday, U.S. spot Bitcoin ETFs extended their withdrawal streak, tallying up to $254.6 million exiting the funds. BlackRock’s iShares Bitcoin Trust (IBIT) experienced $145.6 million in outflows, and Fidelity’s Wise Origin Bitcoin Fund (FBTC) saw losses of $12 million. Additionally, the ARK 21Shares Bitcoin ETF (ARKB) faced a decrease of $29.7 million, and the Bitwise Bitcoin ETF (BITB) shed $9.5 million.

These withdrawals mark the fifth consecutive day of losses, commencing on Nov. 12 with Bitcoin ETFs losing $278.1 million, followed by an unprecedented $866.7 million drop on Nov. 13, which was recorded as the second-worst day ever.

Spot Ether ETFs also felt the impact with a cumulative $182.7 million pulled out on the same day, chiefly from BlackRock’s iShares Ethereum Trust ETF (ETHA), which lost $193 million in one session.

“A turnaround will likely happen with clear signs of disinflation, balanced labor markets, and central bank communications leaning towards easing instead of maintaining higher rates,” Liu remarked.

Translation: “A shift will come with clear disinflation, labor softening without breaking, and central bank communication that clearly tilts toward easing rather than ‘higher for longer.’”

Positive Trends for Solana ETFs

Conversely, Solana ETFs continue to show positive trends amid market challenges, with another day of inflows recorded. The Bitwise Solana Staking ETF (BSOL) saw an influx of $7.3 million, while the Grayscale Solana Trust ETF (GSOL) brought in $0.9 million.

Since their launch in late October, Solana ETFs have consistently reported inflows, totaling approximately $390 million across BSOL, VSOL, and GSOL.