The sharp drop in Bitcoin’s price over the weekend pushed the average investment in the largest spot Bitcoin ETF into the red. BlackRock’s iShares Bitcoin Trust (IBIT) fund found itself in a situation where most investors are holding a losing position for the first time since its launch.
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The fall below $77,000 changed the balance
The turning point came when Bitcoin fell to around $77,000. According to Bob Elliott, chief investment officer at Unlimited Funds, the average investment in IBIT turned negative after Friday’s close. His analysis uses dollar-weighted cumulative returns, which better reflect actual investor behavior.
The data shows that while the fund’s early investors may still be in profit, the massive influx of capital at higher prices has significantly reduced the overall average return. IBIT investors’ cumulative gains peaked at around $35 billion in October, when Bitcoin was trading near historic highs, but have since been gradually eroded.
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Capital outflows and disappointment with the role of “digital gold”
IBIT nevertheless remains one of the most successful ETF products in BlackRock’s history. The fund became the fastest ETF to surpass $70 billion in assets under management and even generated approximately $25 million more in fees than the asset manager’s second most profitable fund in October. However, the current decline in net asset value mirrors the broader sell-off of Bitcoin.
According to CoinShares data, nearly $1.1 billion flowed out of Bitcoin funds during the week ending January 25, with total outflows from crypto funds reaching $1.73 billion. Investors are being discouraged by a combination of falling prices, weakening expectations of interest rate cuts, and the fact that Bitcoin has so far failed to fully fulfill its role as a hedge against currency devaluation. While Bitcoin remains volatile, gold continues to hold its long-term growth trend and is trading near historic highs.
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