Wall Street's Bitcoin Bet: Why ETF Investors Aren't Flinching at 25% Drop

TLDR

Table of Contents

Bitcoin ETFs have retained 95% of their invested capital despite declining inflows and Bitcoin’s 25% price drop in 2025
Total assets under management for US Bitcoin ETFs stand at $115 billion, with inflows dropping from $40 billion to $35 billion
Recent weeks have seen approximately $870 million in outflows, with analysts attributing this to “buy the rumor, sell the news” behavior around Trump’s Strategic Bitcoin Reserve
On-chain data shows large Bitcoin holders (whales with 100-1,000 BTC) sold over 50,000 BTC worth approximately $4.07 billion in the past week
Despite ETF outflows, long-term Bitcoin holders have added over 131,000 BTC to their wallets in the past month

Bitcoin exchange-traded funds (ETFs) continue to show remarkable resilience in early 2025, with investors maintaining their positions despite market volatility. According to data from Bloomberg, approximately 95% of capital invested in US spot Bitcoin ETFs remains intact, even as Bitcoin’s price has declined 25% since January.

Senior Bloomberg ETF analyst James Seyffart shared on March 14 that while Bitcoin ETF inflows have decreased from a peak of $40 billion to around $35 billion, the overall investor base has shown staying power. Total assets under management across US Bitcoin ETFs currently stand at $115 billion.

This behavior mirrors what is typically seen with traditional US stock ETFs. Long-term investors tend to hold their positions during market downturns rather than panic selling. Such patterns suggest a shift from short-term speculation to more strategic, long-term investment approaches.

Data from SoSoValue paints a more detailed picture of recent activity. US spot Bitcoin ETFs have experienced $870 million in outflows over the past week. This extends to $1.6 billion in outflows over the past month.

Buy the rumor, sell the news

Market analysts have characterized these outflows as a classic case of “buy the rumor, sell the news.” The Strategic Bitcoin Reserve initiative, first mentioned by President Trump in July 2024, created market anticipation. By the time of the official announcement at the Crypto Summit, many investors had already priced in the news.

Institutional involvement remains strong despite the price correction. Major Wall Street firms maintain their Bitcoin exposure. Goldman Sachs, for example, currently holds more than $1.5 billion in Bitcoin ETFs.

Daily trading data reveals varied performance across Bitcoin ETF providers. On March 13, total outflows reached $135 million. The BlackRock iShares Bitcoin Trust (IBIT) was one of few products to see positive movement, with net inflows of $45.7 million.

Indicators suggest weakening demand

Several market indicators suggest weakening demand in the broader Bitcoin market. CryptoQuant contributor Darkfost noted that Bitcoin demand has fallen sharply since December 2024. The 30-day simple moving average of apparent demand, which compares new supply to Bitcoin inactive for over a year, shows a drop.

The Bitcoin Sharpe Ratio, which measures risk-adjusted returns, has been declining since March 2024. Data analytics platform Alphractal highlighted this trend in a March 12 post. Even as Bitcoin reached all-time highs above $100,000, the ratio showed increasing risk per unit of return.

Macroeconomic factors have added pressure to Bitcoin’s price. The ongoing Trump tariff discussions and recent inflation data have created market uncertainty. Following the US CPI data release, Bitcoin briefly surged above $84,000 but failed to maintain momentum.

Current trading shows Bitcoin at $81,953, down 1.56% with daily volume falling 22% to under $30 billion. Data from Coinglass indicates 24-hour liquidations have increased to $75 million, with $52 million coming from long positions being closed.

Large Bitcoin holders appear to be reducing their positions. Santiment data shows that whale wallets containing 100-1,000 BTC sold over 50,000 BTC in the past week. This represents approximately $4.07 billion in value changing hands.

Too early to call it a bear market

Ki Young Ju, CEO of on-chain analytics firm CryptoQuant, described the current state of Bitcoin demand as “stuck.” Despite this characterization, Ju emphasized it is “too early to call it a bear market.”

In contrast to ETF outflows and whale selling, long-term Bitcoin holders show continued conviction. Crypto analyst Ali Martinez reported these investors have added over 131,000 BTC to their wallets in the past month alone.

The contrast between long-term holder accumulation and institutional ETF outflows creates an interesting market dynamic. It suggests different investment time horizons and strategies at play within the Bitcoin ecosystem.

Bitcoin’s price movement in the coming weeks may depend on these competing forces. ETF flow trends, whale selling pressure, and long-term holder accumulation will likely determine the next market direction.

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