Bitcoin ETFs Are 'Not An Adoption Vehicle' With Holders On $2B Unrealized Losses, Analyst Says

Macro analyst Jim Bianco once again warned that Bitcoin BTC/USD ETFs are “not an adoption vehicle,” arguing that most inflows into ETFs have come from established rather than new market participants.

What Happened: Bianco’s analysis on social media platform X shows that total assets in all spot Bitcoin ETFs have declined to $46 billion, down from a June peak of $62 billion. This marks the lowest level since Feb. 12.

The flow of funds into these ETFs has also slowed significantly, with only $1 billion in inflows over the last three months, compared to $12 billion in the first two months after launch.

Bianco notes that spot Bitcoin ETF holders are currently on average down 16%, sitting on a record $2.2 billion unrealized loss.

This is based on an average purchase price of $61,000 compared to Bitcoin’s price of $52,900 at the time of Bianco’s post last Friday. Bitcoin has since recovered to $55,250, up 2% over the past 24 hours.

Contrary to expectations, these ETFs have not attracted significant institutional or "boomer" investors, Bianco says.

He points out that the average trade size has fallen below $12,000, the lowest since March, adding that BlackRock confirms 80% of IBIT’s inflows are from self-directed online accounts.

Also Read: VanEck Done With Ethereum Strategy ETF, Blames ‘Operational Considerations’

Why It Matters: Investment advisors and wealth managers, who were expected to drive adoption, account for only 9% of shares outstanding. Hedge funds contribute another 12%, mostly through basis trades rather than directional bets.

Bianco suggests that most inflows to spot Bitcoin ETFs have come from existing on-chain holders moving back to traditional finance accounts, rather than new money entering the crypto space.

He concludes, "The first eight months of Spot BTC trading have shown that build it (Spot BTC ETFs), and the boomers will come was never a thing."

Looking ahead, Bianco believes these ETFs may become instruments of adoption, but not until after the next Bitcoin halving in 2028 and significant development of on-chain tools. He emphasizes the need for patience and further development breakthroughs in the cryptocurrency ecosystem.

What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

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