Bitcoin The price plunge has left investors in the token’s spot exchange-traded funds (ETFs) with losses averaging 15%, setting the stage for potential panic selling if the crypto market does not stabilize.
Since its debut in the United States two years ago, investors have paid an average of around $90,200 per BTC, according to estimates from Bianco Research and 10x Research. With the largest cryptocurrency now trading around $76,800, that leaves them with a paper loss of around $13,400 per BTC.
Being underwater could trigger ETF redemptions, especially by short-term traders and speculators who were buying in hopes of continued gains and quick profits. These potential buybacks could aggravate downward pressure on the market.
Demand for ETFs has exploded since the Oct. 8 crash, which social media largely blames on Binance, the leading cryptocurrency exchange by volume and open interest.
January has already marked a third consecutive month of net outflows, the first three-month streak since their inception. The 11 spot bitcoin ETFs saw a net outflow of $6.18 billion during the period, according to data source SoSoValue.
A deepening bear market could potentially trigger large-scale capitulation: long-term holders abandon, liquidate and volumes explode. This dynamic often marks bearish peak phases.
That said, analysts have previously told CoinDesk that institutional capital flowing into ETFs is intended for the long term and is “sticky,” meaning complete capitulation is unlikely.
