Bitcoin has fallen more than 40% from recent highs, a move that historically rattles retail-heavy crypto markets.
Over the same period, only 6.6% of Bitcoin ETF assets have exited.
For now, the ETF boomers have really come through.
Many ETF buyers treat bitcoin as a 1%–2% “hot sauce” allocation alongside stocks and bonds, rather than a core holding.
Their broader portfolios have benefited from strong equity markets, cushioning the psychological blow of crypto losses.
ETF investors tend to hold really strong, Balchunas said, having lived through multiple market cycles in traditional assets.
Investors heavily concentrated in bitcoin face what Balchunas described as “existential crisis mode.”
Volatility is the cost of the returns, Balchunas said, noting bitcoin has endured seven or eight similar drawdowns historically.
Balchunas sees parallels between bitcoin and gold as ETF-wrapped assets.
Gold ETFs suffered a roughly 40% drop over six months about a decade ago, during which about one-third of assets left.
Despite that, gold ETFs later rebuilt assets and now hold roughly $160 billion.
Bitcoin ETFs briefly rivaled gold ETFs in size before the recent selloff, highlighting how flows can reverse over time.
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