(Nov 5): The do-it-yourself traders who embraced bitcoin ETFs as crypto moved into the mainstream are getting a taste of the digital-asset hype cycle.
After billions poured into the easy-to-access exchange-traded funds this year, helping push bitcoin to a record high, the token is suddenly down more than 20% from its recent peak. While most ETF buyers are still in the green, the margin for error is narrowing fast.
The average cost basis — the blended entry price across all lifetime inflows into US spot bitcoin ETFs — is around US$89,613, according to K33 Research. That’s about 11% below where the digital token currently trades and effectively marks the break-even point for the average ETF buy-in. And notably, it aligns with a key technical zone from April, when bitcoin reversed off its 2025 low after a prolonged stretch of selling pressure.
“It was very interesting to see how the April reversal coincided with the cost basis,” said Vetle Lunde, the head of research at K33.
The implication: many ETF investors didn’t chase the top. Instead, they bought during a selloff — adding exposure at what looked like a market bottom. But with bitcoin now in retreat if the cryptocurrency once again reaches that level, investors could quickly flip their positioning.
Proponents argue that ETF buyers are in it for the long haul — less reactive to short-term price swings and, so far, a stabilizing force that has helped dampen bitcoin’s historically extreme volatility.
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For newer investors who embraced bitcoin through its sleek, regulatory-friendly ETF wrapper, the recent drop is a lesson: price swings haven’t disappeared just because Wall Street showed up.
Meanwhile, the broader market mood has darkened. Bitcoin dropped more than 6% at one point Tuesday to below US$100,000, its lowest level since June. It’s now down 20% from its all-time high last month, a magnitude that would indicate a bear market in more traditional asset classes. Ether and smaller altcoins fared even worse. The rout is being driven by weak participation and lingering fear from October’s historic liquidation wipe-out, which flushed billions from leveraged trades and left long positioning hollowed out.
BlackRock’s IBIT ETF, the largest one tracking bitcoin, had taken in more than US$27 billion in investor flows so far this year, with its assets currently sitting around US$85 billion, data compiled by Bloomberg showed.
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Bitcoin has over the years lived through numerous boom-and-bust cycles, making a name for itself by bouncing back from drawdowns that repeatedly surpassed 50%. Investors putting their money toward the coin are “hopefully aware” of that characteristic, said James Seyffart at Bloomberg Intelligence.
“This asset and these ETFs move forward in this two-steps-forward one-step-back move,” he said. “It’s a very volatile asset and crypto in general is a very volatile asset class. I can’t pretend to know if this is one of those ‘one step back’ moments or the beginning of one of those leaps backwards.”
Uploaded by Isabelle Francis
