Bitcoin ETFs Hold 95% Of Their Assets Despite Market Volatility

Exchange-traded funds for Bitcoin have maintained over 95% of their invested capital, despite a slowdown in inflows and the recent significant drop in price. This resilience, comparable to that of traditional stock ETFs, reflects a change in the behavior of crypto investors.

Bitcoin under pressure, but ETFs hold strong

James Seyffart, senior ETF analyst at Bloomberg, shared revealing data on March 14 on platform X about the current situation of ETFs Bitcoin. These funds have seen their inflows decrease, falling from a peak of $40 billion to about $35 billion.

However, with a total of assets under management reaching $115 billion, they have succeeded in retaining over 95% of their invested capital, despite a notable 25% drop in the price of Bitcoin.

This resistance to market pressures resembles the behavior observed in traditional American stock ETFs, where long-term investors do not panic during bearish periods.

On the contrary, they continue to acquire shares, signaling a paradigm shift: from a short-term speculative approach to long-term wealth investment strategies.

Warning signals for the future of the market

Several indicators nonetheless raise concerns. The data from SoSoValue shows that U.S. spot Bitcoin ETFs have recorded significant capital outflows: $870 million last week and $1.6 billion over the past month.

Other warning signals are emerging. Darkfost, a contributor at CryptoQuant, identified a substantial drop in Bitcoin demand since December. The 30-day moving average of “apparent demand“, which compares the new supply to BTC that has been inactive for over a year, shows a notable decline, indicating a reduction in the number of active buyers and a more cautious market.

The Sharpe ratio of Bitcoin, which measures risk-adjusted returns, has also been declining since March 2024, according to analysis platform Alphractal. This trend, observable despite reaching historical highs above $100,000, indicates an increase in risk per unit of return.

This deterioration can be attributed to several factors: macroeconomic uncertainty, rising volatility, and a slowdown in short-term returns. Data from Santiment further reinforces these concerns, revealing that large Bitcoin holders (holding between 100 and 1,000 BTC) sold over 50,000 BTC last week, amounting to about $4.07 billion.

Bitcoin ETFs thus demonstrate remarkable short-term resilience, but the multiple warning signals foretell turbulence in the market in the coming months. Investors now seem to favor a long-term vision, despite the growing uncertainties.