Bitcoin’s sharp decline over the weekend likely pushed investors’ overall position in the largest spot Bitcoin exchange-traded fund (ETF) into negative territory, underscoring the severity of the recent downturn.
The average dollar invested in BlackRock’s iShares Bitcoin Trust (IBIT) is now underwater after Friday’s close, according to Bob Elliott, chief investment officer at asset manager Unlimited Funds. This change coincided with a sharp decline in Bitcoin (BTC) price, which slipped into the mid-$70,000 range.
Elliott shared a chart plotting overall investor returns, weighted in dollars, showing cumulative gains slipping slightly into negative territory at the end of January.
The data suggests that while early IBIT investors can still make profits, larger capital inflows at higher price levels have brought overall dollar-weighted returns below zero. In effect, cumulative gains since the fund’s launch are now erased on a dollar-weighted basis.
For comparison, IBIT’s dollar-weighted returns peaked at around $35 billion in October, when Bitcoin was trading at record highs.
IBIT is one of BlackRock’s most successful ETF launches, becoming the the fastest fund to reach $70 billion in assets under management. In October, reports showed that the IBIT generated approximately $25 million in additional fees as the asset manager’s second most profitable ETF.
Independent thata on Yahoo Finance shows that IBIT’s net asset value has declined in recent weeks, which aligns with the broader Bitcoin sell-off. This decline partly explains why overall investor returns, weighted in dollars, have moved into negative territory.
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Bitcoin ETF Outflows Accelerate
The deterioration in dollar-weighted returns of Bitcoin ETFs is playing out alongside a broader withdrawal from crypto investment productsas investors reduce their exposure amid falling prices.
In the week to January 25, digital asset investment products saw nearly $1.1 billion in Bitcoin-only outflows, while total crypto outflows reached $1.73 billion – the largest weekly withdrawal since mid-November, according to CoinShares. Outgoing flows were heavily concentrated in the United States.
“Diminishing expectations for lower interest rates, negative price momentum, and disappointment that digital assets have not yet participated in the depreciation trade likely fueled these outflows,” CoinShares said.
“Depreciation trading” refers to positioning in assets expected to preserve their value in the face of inflation and currency dilution. Bitcoin was widely considered a candidate for this role due to its fixed supply and monetary design.
However, it still remains to attract these flows towards the to the same extent as gold. Despite a recent pullback, gold has remained in a sustained uptrend for over a year and recently reached record highs above $5,400 per troy ounce.
Related: $1.82 billion withdrawn from Bitcoin and Ether spot ETFs amid metals rally
