Bitcoins The price crash has left investors in the tokens’ spot exchange-traded funds (ETF) with losses of 15% on average, setting the stage for potential panic selling if the crypto market does not stabilize.
Since their US debut two years ago, investors have paid an average of about $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 share. BTC.
Being underwater can trigger ETF redemptions, especially by short-term traders and speculators who bought in hopes of continued gains and quick profits. These potential redemptions may contribute to bearish pressure on the market.
Demand for ETFs has surged since the Oct. 8 crash, which social media widely blamed on Binance, the leading cryptocurrency exchange by volume and open interest.
January already marked a third straight month of net outflows, the first three-month run since their inception. The 11 spot bitcoin ETFs recorded net outflows of $6.18 billion during the period, according to data source SoSoValue.
A deepening of the bear market could potentially spur a full-scale capitulation: long-term owners give up, liquidate, and volumes explode. These dynamics often mark bear peak phases.
That said, analysts previously told CoinDesk that institutional capital flowing into ETFs is meant for the long haul and is “sticky,” meaning a complete capitulation is unlikely.
