Bitcoin ETFs Reach All-Time High with $11.5 Billion in Volume as Many Investors Face Losses

US spot Bitcoin exchange-traded funds (ETFs) have just experienced their busiest trading session ever. However, the recent decline in Bitcoin's price has resulted in the average ETF investor currently holding losses.

Key Takeaways

US spot Bitcoin ETFs recorded an all-time high trading volume of $11.5 billion.
Despite high trading activity, the average investor in these ETFs is facing losses due to Bitcoin’s price drop.
BlackRock’s IBIT was the leading ETF in trading volume but saw significant outflows.
The Bitcoin market is currently experiencing substantial net outflows, indicating investor caution amidst market turbulence.

This article encapsulates the recent trends in Bitcoin ETFs and highlights the challenges investors are facing in the current market landscape.

This surge in trading activity marks a pivotal moment as the market adapts to the recent downturn experienced in the crypto sector.

BlackRock’s IBIT Leads Amid High Inflows During Market Turmoil

On November 21, Eric Balchunas, Senior ETF Analyst at Bloomberg, reported that the 12 spot Bitcoin ETFs collectively recorded a staggering $11.5 billion in trading volume.

US Bitcoin ETFs Record Trading Volume. Source: Eric Balchunas

Balchunas characterized the uptick in volume as “wild but normal,” emphasizing that ETFs and similar asset classes typically see heightened turnover during stressful market conditions. He noted that such bursts of activity often indicate a release of liquidity as investors adjust their positions.

The increased turnover showcased dynamic two-sided participation, with some investors reducing their holdings while others seized the opportunity to buy at lower prices.

Leading the charge was BlackRock’s IBIT, which generated $8 billion in turnover, constituting over 69% of the total trading volume for spot Bitcoin ETFs that day. Despite this impressive figure, IBIT ultimately registered $122 million in outflows by the end of the day.

“Notably, we also saw a record week for put options in IBIT. This may encourage some investors to continue holding their investments as they can purchase puts as a hedge while maintaining long positions,” added Balchunas.

In addition, other Bitcoin ETFs, notably Fidelity’s FBTC, recorded net inflows exceeding $238 million. Nevertheless, these 12 Bitcoin investment vehicles are on track for their worst trading month, with net outflows surpassing $3.5 billion.

US Bitcoin ETFs Monthly Flows. Source: SoSoValue

This significant outflow, combined with the record trading session, occurs as the average spot Bitcoin ETF holder finds themselves at a loss.

Data from Bianco Research indicates that the weighted average purchase price for inflows into spot Bitcoin ETFs stood at $91,725 as of November 20.

The average Spot BTC ETF holder is now in the red. pic.twitter.com/fMb5ln2we7 — Jim Bianco (@biancoresearch)

With Bitcoin's price dipping below this level earlier this week, most holders— including those who entered the market in January 2024—are now facing unrealized losses.

This week, Bitcoin's value fell approximately 12%, reaching a low of $80,000 before bouncing back to $84,431 at the time of this report. This price trend reflects a month-long decline, underscoring the prevailing risk-off mood within the digital asset space.