iShares Bitcoin ETF Investors Remain Steadfast Amid Significant Price Drop

At the start of the week, the iShares Bitcoin ETF encountered a challenging situation, showing a 14% decline. Despite this downturn, a market analysis reveals that investors chose to maintain their positions.

Steady Holders

Market opening on August 5 brought unexpected news as the iShares Bitcoin ETF ($IBIT) recorded a 14% drop following an 8% decline the previous week. However, according to Bloomberg’s senior ETF analyst Eric Balchunas, the lack of investor activity was notable, with zero cash flows, indicating that traders remained unwavering in their holdings. Balchunas likened their steadfastness to the “Rock of Gibraltar” and expressed that the financial ecosystem is fortunate to have such resilient investors.

While the overall outflows in the ETF sector were reported at down $168 million, this amount represents only 0.3% of total assets under management (AUM), with one-third of that stemming from the Grayscale Bitcoin Trust ($GBTC). Balchunas anticipates possible further outflows in the current week, suggesting that losses could amount to “a couple billion,” potentially reaching 5%.

“So far, though, it looks much stronger than that. I have been surprised by the holding ability of older investors and equally surprised by the frailty of the newer market participants.”

Market Impact

Significant outflows from the ETF sector have influenced the broader cryptocurrency market, pushing the Crypto Fear & Greed Index into the “Extreme Fear” territory. This marks the first instance of the index touching this level in two years.

Bitcoin (BTC) experienced considerable volatility, plummeting to $49,500 on August 5. During this decline, long-term holders sold approximately $600,000 worth of BTC, with short-term holders accounting for the remaining losses.

Despite the turmoil, Bitcoin and Ether ETFs managed to achieve nearly $6 billion in trading volume on August 5. Meanwhile, Ethereum ETFs remained largely unaffected, as noted by Balchunas on August 6. He pointed out that equity ETFs attracted “double the cash” compared to usual during what he described as the “scariest sell-off in quite a while.”