Bitcoin’s slide below $80,000 has pushed a significant portion of US spot BTC exchange-traded fund (ETF) buyers into $7 billion in paper losses.
According to CryptoSlate’s data, the world’s largest digital asset fell to as low as $74,609 over the weekend amid liquidity concerns and a risk-off tone in global markets. BTC has recovered to approximately $77,649 as of press time.
Alex Thorn, Galaxy Digital’s head of research, noted that this price performance indicates that Bitcoin is trading below the average cost basis of US ETFs. Notably, spot Bitcoin ETF investors are holding average paper losses of approximately 15%, implying an average entry price of approximately $90,200 per Bitcoin.
Bitcoin ETFs Cost Basis (Source: Galaxy Research)That setup can change behavior. Unlike self-custody buyers, who often tolerate sharp swings, ETF holders include advisers and allocators who rebalance according to predefined portfolio rules. When the average holder is down, rallies can run into “sell-to-even” selling.
When prices fall again, some investors reduce exposure to mitigate risk, especially if volatility rises and Bitcoin continues to move in step with equities.
Considering this, some industry experts argued that the significant drawdown raises the stakes about whether the current redemption streak from the 12 ETF products will evolve from a tactical pause into a sustained market headwind.
Who’s underwater, and by how much?
The extent of the damage is becoming clearer through on-chain and fund-flow analyses.
Jim Bianco of Bianco Research highlighted that the 12 spot Bitcoin ETFs now hold approximately 1.29 million Bitcoin, worth over $115 billion. These funds collectively hold roughly 6.5% of all Bitcoin in circulation.
When combined with the corporate treasury of Strategy (formerly MicroStrategy), the ETF holdings represent 10% of all Bitcoin.
However, their entry points differ drastically. Strategy has been buying Bitcoin since 2020, averaging $76,020 per purchase, leaving it with an unrealized profit of just $1.17 billion, down from over $30 billion last October.
In contrast, the ETF investors arrived later and paid higher prices.
Bianco noted that the 12-spot Bitcoin ETFs have an average purchase price of approximately $90,200, approximately $13,000 (16%) above current prices.
Bitcoin ETFs Average Purchase Price (Source: Jim Bianco)Combined, the average purchase price of the ETFs is $85,360, indicating an average loss of approximately $8,000. This represents an unrealized loss of approximately $7 billion for these investors.
Essentially, that places the average Bitcoin ETF buyer underwater.
James Check of Checkonchain added another layer of nuance, stating that if one assumes a cost basis of inflows on the day they occurred, 62% of ETF inflows are now underwater.
Bitcoin ETFs Weekly Flows in Profit and Loss (Source: CheckOnChain)US Bitcoin ETFs are bleeding funds
Meanwhile, the Bitcoin ETF holders’ losses have arrived alongside a pronounced shift in capital flows.
Across the 12 spot Bitcoin ETFs, net outflows have totaled roughly $6.18 billion from November 2025 through January 2026. This is the longest monthly outflow streak since these products launched in 2024.
Notably, the redemptions have been punctuated by large daily drawdowns.
For context, SoSo Value data show that the products recorded net redemptions totaling more than $1.3 billion in the last two trading days of January, alongside a 9-day outflow streak, punctuated by a modest inflow of $6.3 million.
When outflows occur in bursts, the market has less time to absorb the supply, which can exacerbate intraday volatility. In episodes like this, Bitcoin often trades like a high-beta macro asset.
Essentially, the outflows represent a reversal of fortunes for BTC ETFs, which had previously been a consistent source of demand for the leading cryptocurrency.
How much Bitcoin the market must swallow
The forward question for the market is basic supply-and-demand math: what happens to Bitcoin’s price discovery if the outflow trend persists?
If the ETF complex continues to shed more than $6 billion every three months, the implied monthly pace is approximately $2 billion in net outflows.
At a hypothetical $75,000 Bitcoin price, this corresponds to roughly 27,000-28,000 BTC per month that other buyers must absorb.
If prices fall, the same dollar outflow corresponds to more BTC, thereby increasing the amount that must be absorbed elsewhere.
That figure looks even larger when compared with Bitcoin’s post-halving issuance schedule. The 2024 halving reduced the block reward to 3.125 BTC, leaving the average new supply at approximately 450 BTC per day, or roughly 13,500 BTC per month.
Sustained ETF redemptions at the recent pace would therefore amount to a supply equivalent to about two months of new issuance every single month.
Unless other demand sources re-emerge, this imbalance can weigh on sentiment and further depress the BTC price.
Why selling can feed more selling
The relationship between ETF flows and price action is statistically significant, and the buyer mix helps explain this relationship.
A report from K33 Research last year found that Bitcoin’s price remains closely tied to ETF flows, with an R-squared of 0.80, accounting for approximately 80% of the variance in 30-day BTC returns.
Bianco pointed to the average trade size as a reality check on who is actually driving activity in these funds. While the average trade for the SPDR S&P 500 ETF Trust (SPY) is $111,300 and the SPDR Gold Shares (GLD) is $87,000, the average trade for Bitcoin ETFs is just $15,800.
According to him, that profile appears more like brokerage retail than long-duration institutional positioning.
Average Trade Size of a Bitcoin ETF Holder (Source: Bianco Research)If the marginal ETF holder, like Bianco pointed out, is more retail-like, flows can become more “price-driven.”
In plain terms: when prices fall, more investors may decide to get out, and those exits show up as redemptions. Redemptions then force sponsors to sell spot Bitcoin to meet cash withdrawals, which can push the price down again.
Considering this, CryptoSlate’s analysis suggests the mid-$75,000s could provide support if buyers step in.
If the Bitcoin price holds those areas and flows stabilize, ETFs could revert from being a source of supply to a marginal buyer again. This would reduce the mechanical supply overhang and potentially dampen market volatility.
However, if outflows persist, BTC could face significant headwinds that could further depress its price. Alphractal CEO Joao Wedson noted that the next major support level for BTC is approximately $65,500 in such scenarios.
Source: https://cryptoslate.com/bitcoin-triggers-7b-loss-for-etf-holders-as-price-could-drop-to-65000-while-strategy-mstr-sits-on-billion-dollar-cushion/
