Bitcoin ETFs Hold Steady Despite 40% Price Drop, Analyst Says
Bitcoin has fallen more than 40% from its October highs, yet investors in spot Bitcoin ETFs have shown surprising resilience, with only 6.6% of assets pulled during the selloff.
In an interview on CoinDesk’s Markets Outlook, Bloomberg Intelligence Senior ETF Analyst Eric Balchunas highlighted several factors behind this stability.
ETF investors tend to treat bitcoin as a small “hot sauce” allocation — often just 1%–2% of a broader portfolio of stocks and bonds — rather than a core holding. Their diversified portfolios, bolstered by strong equity markets, help cushion the psychological impact of crypto losses. “For now, the ETF boomers have really come through,” Balchunas said. “They tend to hold really strong, having lived through multiple market cycles in traditional assets.”
This contrasts sharply with crypto-native investors. Those heavily concentrated in bitcoin or using leverage often experience what Balchunas calls “existential crisis mode,” contributing more to selling pressure. “Volatility is the cost of the returns,” he added, noting that bitcoin has weathered seven or eight similar drawdowns historically.
Balchunas also draws parallels between bitcoin and gold ETFs. About a decade ago, gold ETFs fell roughly 40% over six months, losing about one-third of assets, but later rebounded to hold roughly $160 billion. Bitcoin ETFs, which briefly rivaled gold ETFs in size before the recent selloff, demonstrate that flows can reverse over time.
Looking ahead, volatility is likely to continue, but ETFs may help anchor bitcoin in mainstream finance. “A selloff doesn’t mean the end,” Balchunas said. “It just means it’s a selloff.” ETF structures now position bitcoin alongside stocks, bonds, and commodities in traditional portfolios, giving investors long-term exposure without the emotional swings seen in concentrated crypto holdings.
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