Latest developments: ETF investors are proving more resilient than expected during the latest Bitcoin pullback. In an interview on CoinDesk Markets Outlook, Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, highlighted several key data points demonstrating this stability:
- Bitcoin has fallen more than 40% from recent highs, a move that has historically roiled retail-heavy crypto markets.
- During the same period, only 6.6% of Bitcoin ETF assets were liquidated.
- “So far, the ETF baby boomers have really succeeded,” he said.
Why ETF Holders Hold: Balchunas argues that ETF investors are structurally different from crypto-native traders.
- Many ETF buyers view bitcoin as a 1-2% “hot sauce” allocation alongside stocks and bonds, rather than as a core holding.
- Their broader portfolios benefited from strong stock markets, easing the psychological blow of crypto losses.
- ETF investors “tend to maintain a very strong position,” Balchunas said, after going through several market cycles for traditional assets.
The contrast with crypto natives: The same price drop can be radically different depending on the exposure.
- Investors heavily focused on Bitcoin are facing what Balchunas described as “existential crisis mode.”
- Leveraged traders and long-time holders could exert greater selling pressure than ETF investors.
- “Volatility is the cost of returns,” Balchunas said, noting that Bitcoin has suffered seven or eight similar pullbacks in the past.
Lessons Learned from Gold ETFs: Balchunas sees parallels between Bitcoin and gold as assets wrapped in ETFs.
- Gold ETFs suffered a decline of about 40% in six months about a decade ago, during which about a third of assets disappeared.
- Despite this, gold ETFs subsequently rebuilt their assets and now hold around $160 billion.
- Bitcoin ETFs briefly rivaled gold ETFs in size before the recent selloff, highlighting how flows can reverse over time.
What comes next: Volatility will likely persist, but ETFs could anchor Bitcoin’s place in traditional finance.
- Balchunas said Bitcoin’s 17-year history shows repeated recoveries to new highs after major downturns.
- ETF structures mean that Bitcoin now sits alongside stocks, bonds and commodities in traditional portfolios.
- “A liquidation does not mean the end,” he said. “It just means it’s a liquidation.”
