Bitcoin's recent price action has put a significant segment of the market underwater, particularly investors in US spot Bitcoin Exchange-Traded Funds (ETFs). Following weeks of substantial outflows, the cryptocurrency has dipped below the average acquisition cost for these institutional products, raising concerns about market sentiment and potential further declines.
Bitcoin ETFs Face Pressure
Recent data reveals that Bitcoin is currently trading below the average cost basis for US spot Bitcoin ETFs, estimated at approximately $87,830 per BTC. This critical threshold indicates that the average ETF investor is now experiencing a loss on their holdings. The shift comes on the heels of the ETFs recording their second and third largest weekly outflows last month, totaling $2.8 billion over a two-week period. These products collectively manage about $113 billion in assets, holding around 1.28 million BTC, making the recent outflows a significant indicator of waning demand in the institutional space.
Market Sentiment and Bearish Concerns
While Bitcoin's price has declined by approximately 40% from its October peak, the cumulative inflows into Bitcoin ETFs have only dropped 12% from their high. This suggests that institutional investors, often described as having "harder hands," might be more resilient to selling off their positions despite the losses, compared to the broader market. However, the sustained lack of demand and ongoing macroeconomic uncertainties—including geopolitical conflicts, US economic struggles with rising unemployment and inflation, and regulatory stagnation—are fueling fears of a potential full-blown bear market. Experts warn that if demand for Bitcoin does not recover soon, technical indicators could signal long-term selling pressure, pushing the asset into a deeper downturn.
