Bitcoin exchange-traded funds (ETFs) continue to hold billions in assets despite the sharp fall in Bitcoin prices, but this persistence is not necessarily the bullish signal that many have come to believe.
Resilience, one analyst says, comes from market makers and arbitrageurs trading in and out rather than long-term hardcore holders betting on price appreciation.
Bitcoin the price peaked above $126,000 in early October and recently crashed to near $60,000. Despite the price halving, the 11 U.S.-listed spot Bitcoin ETFs saw a total of just $8.5 billion in net outflows. These funds still hold $85 billion in assets under management, equivalent to more than 6% of Bitcoin’s supply.
Several analysts, including those CoinDesk spoke with at Consensus Hong Kong last week, cited the same data as evidence of bullish positioning.
Markus Thielen, founder of 10x Research, says resilience comes not only from long-term hodlers, but also from market makers and arbitrageurs with hedged and non-directional positions.
“This reflects the structural nature of ETF ownership, which is dominated by market makers and arbitrage-focused hedge funds holding broadly hedged positions, as well as long-term institutional investors with lower turnover and longer investment horizons,” Thielen said in a note to clients Wednesday.
Thielen pointed to institutions’ reports (called 13F filings) for the end of 2025. They show that 55% to 75% of BlackRock’s $61 billion IBIT ETF is held by market makers and arbitrage-focused hedge funds that keep their bets hedged or neutral, not exactly bullish on bitcoin.
Market makers are entities that create liquidity in an exchange’s order book, facilitating the seamless execution of large buy and sell orders at stable prices. They take advantage of the bid-ask spread and therefore strive to maintain a neutral exposure to the market in order to circumvent the risks of price volatility. Similarly, arbitrage hedge funds take opposing positions in two markets, such as spot ETFs and futures, to profit from the price gap between the two.
The two entities therefore do not inject directional pressure (bullish/bearish) into the market.
Thielen added that market makers reduced their exposure from about $1.6 billion to $2.4 billion during the fourth quarter, with bitcoin trading near $88,000, reflecting “a decline in speculative demand and a reduction in the need for arbitrage stocks.”
