Bitcoin’s sharp decline over the weekend has likely pushed the aggregate investor position in the largest spot Bitcoin exchange-traded fund (ETF) into negative territory, underscoring the severity of the recent downturn.
According to Bob Elliott, chief investment officer at asset manager Unlimited Funds, the average dollar invested in BlackRock’s iShares Bitcoin Trust (IBIT) is now underwater following Friday’s close. The shift coincided with a steep drop in Bitcoin’s (BTC) price, which slid into the mid-$70,000 range.
Elliott shared a chart tracking aggregate, dollar-weighted investor returns, showing cumulative gains slipping slightly into negative territory as of late January.
The data suggest that while early IBIT investors may still be in profit, heavier inflows at higher price levels have pulled overall dollar-weighted returns below zero. In effect, cumulative gains since the fund’s launch have now been erased on a dollar-weighted basis.
By comparison, IBIT’s dollar-weighted returns peaked at roughly $35 billion in October, when Bitcoin was trading at record highs.
IBIT is one of BlackRock’s most successful ETF launches, becoming the fastest fund to reach $70 billion in assets under management. In October, reports showed that IBIT generated about $25 million more in fees than the asset manager’s second-most profitable ETF.
Independent data on Yahoo Finance shows that IBIT’s net asset value has declined in recent weeks, aligning with the broader Bitcoin sell-off. The decline helps explain why aggregate, dollar-weighted investor returns have shifted into negative territory.
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Bitcoin ETF outflows accelerate
The deterioration in dollar-weighted returns for Bitcoin ETFs is unfolding alongside a broader pullback from crypto investment products, as investors reduce exposure amid declining prices.
In the week to Jan. 25, digital asset investment products recorded nearly $1.1 billion in outflows from Bitcoin funds alone, while total crypto fund outflows reached $1.73 billion — the largest weekly withdrawal since mid-November, according to CoinShares. The outflows were heavily concentrated in the United States.
“Dwindling expectations for interest rate cuts, negative price momentum and disappointment that digital assets have not participated in the debasement trade yet have likely fuelled these outflows,” CoinShares said.
The “debasement trade” refers to positioning in assets expected to preserve value amid inflation and currency dilution. Bitcoin was widely seen as a candidate for that role because of its fixed supply and monetary design.
However, it has yet to attract those flows to the same extent as gold. Despite a recent pullback, gold has remained in a sustained uptrend for more than a year and recently reached record highs above $5,400 per troy ounce.
Related: $1.82B pulled from spot Bitcoin and Ether ETFs amid metals rally
