While Bitcoin soared to record highs earlier this year, the party seems to be winding down as spot Bitcoin exchange-traded funds face a harsh reality check. About 60% of ETF investors are now underwater, sitting on roughly $100 billion in unrealized losses. That’s like watching your dream vacation fund turn into monopoly money.
Bitcoin ETF investors are drowning in $100 billion of unrealized losses as the crypto party crashes back to earth.
The numbers tell a sobering story. Most ETF money flowed in when Bitcoin was trading between $75,000 and $85,000, giving these funds an average cost basis around $80,000 to $82,000. With Bitcoin currently hovering near $86,000, many investors are barely breaking even or still losing money.
Bitwise estimates total unrealized losses across the crypto market at a staggering $152 billion after Bitcoin’s 35% tumble from its peak. This illustrates the danger of chasing digital assets that often disappoint investors when the initial excitement fades.
Bitcoin miners are feeling the squeeze too. The Luxor hashprice index averaged just $39.82 in November and hit an all-time low of $35.06 on November 22. Mining companies are pulling back operations as profits evaporate faster than morning dew. Many mining stocks now trade below Bitcoin’s book value, making it harder for these companies to raise money for more Bitcoin purchases. Miners are scaling back their network hashrate in response to deteriorating market conditions.
The pain shows up in daily trading data as well. Glassnode reports that investors are realizing losses at $555 million per day on average, the highest level since the FTX collapse. November saw $4 billion flow out of Bitcoin ETFs, signaling that institutions are heading for the exits. Bitcoin’s correlation to equities has increased significantly, with the cryptocurrency now moving closely with the S&P 500 and Nasdaq.
The $80,000 price level has become make-or-break territory. If Bitcoin drops below this essential support, it could trigger a wave of forced selling from institutional investors. Standard Chartered warns that falling below $90,000 would leave half of all crypto holdings underwater.
Despite the gloom, some analysts see patterns that might offer hope. Bitcoin has followed a cycle of breaking records, dropping to cost basis levels, then rallying 60% or more within six months. This pattern has repeated three times since ETFs launched in January 2024.
The crypto market’s future now hangs on whether Bitcoin can hold above key support levels and restore investor confidence.
