Latest news: ETF investors are proving more resilient than many expected during the latest bitcoin crash. In an interview on CoinDesk’s Markets Outlook, Bloomberg Intelligence Senior ETF Analyst Eric Balchunas highlighted several key data points that demonstrate this stability:
- Bitcoin has fallen more than 40% from recent highs, a move that historically shakes retail crypto markets.
- During the same period, only 6.6% of Bitcoin ETF assets exited.
- “For now, the ETF boomers have really come out ahead,” he said.
Why ETF Holders Hold: Balchunas argues that ETF investors are structurally different from crypto-native traders.
- Many ETF buyers treat bitcoin as a 1% to 2% “hot sauce” allocation alongside stocks and bonds, rather than a core holding.
- Their broader portfolios have benefited from the strength of stock markets, cushioning the psychological blow of cryptocurrency losses.
- ETF investors “tend to stay very strong,” Balchunas said, having lived through multiple market cycles in traditional assets.
The contrast with cryptonatives: The same price drop can look radically different depending on the exposure.
- Investors heavily focused on bitcoin are facing what Balchunas described as “existential crisis mode.”
- Leveraged traders and long-time holders may be driving greater selling pressure than ETF investors.
- “Volatility is the cost of returns,” Balchunas said, noting that bitcoin has suffered seven or eight similar declines historically.
Lessons from gold ETFs: Balchunas sees parallels between bitcoin and gold as assets wrapped in ETFs.
- Gold ETFs suffered a decline of about 40% in six months about a decade ago, during which about a third of assets disappeared.
- Despite that, gold ETFs later rebuilt their assets and now hold approximately $160 billion.
- Bitcoin ETFs briefly rivaled gold ETFs in size before the recent sell-off, highlighting how flows can reverse over time.
What comes next: Volatility is likely to persist, but ETFs can cement bitcoin’s place in traditional finance.
- Balchunas said bitcoin’s 17-year history shows repeated recoveries to new highs after big drops.
- ETF structures mean Bitcoin now sits alongside stocks, bonds and commodities in core portfolios.
- “A liquidation doesn’t mean the end,” he said. “It just means it’s a liquidation.”
