Bitcoin Crashes Below $90K: ETF Holders Dive into Deep Red Waters
The Bitcoin surge that attracted a large number of new investors, thanks to ETFs, has officially collapsed.
Quick overview
- The recent surge in Bitcoin, driven by ETFs, has collapsed, leading to significant losses for investors in US exchange-traded funds.
- The average cost basis for ETF inflows is around $89,600, and investors are losing money as Bitcoin falls below this level.
- Despite the downturn, purchases made when Bitcoin was valued between $40,000 and $70,000 remain profitable for some investors.
- The decline highlights the persistent volatility of cryptocurrencies, even with the influx of institutional capital and the introduction of over 110 cryptocurrency-focused ETFs in the US.
Live BTC/USD Chart
The Bitcoin surge that attracted a large number of new investors, thanks to ETFs, has officially collapsed. Currently, investors in US exchange-traded funds that provide direct access to cryptocurrencies are suffering collective losses.
According to Sean Rose of Glassnode, the average cost basis for all ETF inflows is roughly $89,600, which Bitcoin surpassed on Tuesday. The flow-weighted average price of all ETF inflows since launch is shown in that figure.
The cohort is losing money when Bitcoin moves below that line. The good news is that, according to Rose, many purchases made when the coin was worth between $40,000 and $70,000 are still profitable.
The achievement highlights how quickly optimism in cryptocurrency markets has diminished. Bitcoin has now fallen more than 30% after reaching all-time highs in early October.
Despite the well-known volatility of cryptocurrencies, Wall Street was unprepared for the decline due to the influx of institutional capital that had flooded the market since Donald Trump’s election. For both institutional and retail investors, who have benefited greatly from the recent surge in cryptocurrency due to the prospect of future gains, the breach represents a test of strength.
Although the ETF wrapper has been praised as a more secure and regulated way to invest in digital assets, the recent decline serves as a reminder that Wall Street’s arrival hasn’t eliminated the infamous volatility of cryptocurrencies. This year, billions of dollars have poured into Bitcoin-focused exchange-traded funds (ETFs).
The lineup has become so popular that issuers have introduced products beyond funds that concentrate on the biggest token and its siblings, Ether. According to data compiled by Bloomberg, there are currently over 110 cryptocurrency-focused ETFs trading in the US.
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