$35 billion in gains "disappear" ... IBIT investors are all in the loss zone

The impact of Bitcoin decline… IBIT investor returns also turn negative

The recent plunge in Bitcoin (BTC) prices has, for the first time, pushed the average returns of those investing in the BlackRock spot Bitcoin ETF IBIT into the “loss zone.” Analysts believe this indicates that the cumulative returns since IBIT’s listing, measured in USD, have essentially disappeared.

Bob Elliott, Chief Investment Officer (CIO) of American asset management firm Unlimited Fund, pointed out on the 1st (local time): “Due to the recent Bitcoin crash, the average USD purchase price of IBIT investments has entered the loss zone.” Since last Friday, Bitcoin has fallen to the mid-$70,000 range, dampening investment sentiment. On a USD-weighted basis, due to large inflows of funds at high levels, the overall returns for IBIT investors have turned negative.

According to a chart shared by Bob Elliott, as of the end of January, IBIT’s cumulative return has slightly turned negative. While some investors who successfully bought at lows during the ETF’s initial launch may still have gains, the large inflow of funds at high points has caused the overall USD-weighted return to become negative.

This stands in stark contrast to just a few months ago. In October last year, when Bitcoin hit its all-time high, the USD-based cumulative gains of IBIT were estimated to have reached about $35 billion (approximately 50.82 trillion KRW).

Return rates plummet, Bitcoin investment enthusiasm cools rapidly

IBIT is considered the fastest-growing product in BlackRock’s ETF lineup. Within just a few months of its launch, its assets under management (AUM) surpassed $70 billion (approximately 101.64 trillion KRW), setting a record for the shortest time. By October last year, its revenue from fees alone exceeded that of the second-ranked BlackRock ETF by $25 million (approximately 3.63 billion KRW).

However, with recent Bitcoin price declines, IBIT’s net asset value (NAV) has also decreased in tandem, and the average investor returns have fallen accordingly. According to Yahoo Finance data, IBIT’s value in recent weeks has mirrored the weak market trend of overall Bitcoin.

Market concerns are growing that this shift to negative returns could lead to waning investor sentiment and capital outflows. In fact, according to CoinShares data, during the week ending January 25, global digital asset investment products saw outflows of about $1.73 billion (approximately 2.5131 trillion KRW). Among them, Bitcoin funds alone experienced net outflows of about $1.1 billion (approximately 1.5972 trillion KRW). This is the largest weekly outflow since mid-November last year.

CoinShares’ report states: “The weakening of rate cut expectations, ongoing downtrend, and the lack of trust in Bitcoin as an inflation hedge asset—also known as a ‘currency devaluation’ alternative—have collectively led to large-scale capital outflows.”

Lack of “inflation hedge” expectations… compared to gold

Bitcoin was once viewed as a safe asset alternative similar to gold. The reason is its fixed supply, which can serve as a store of value during inflation. However, based on current fund flows, gold still dominates in actual asset allocation.

Gold has been on a continuous upward trend for over a year, recently surpassing $5,400 per ounce (approximately 78.5 million KRW), setting a new record high. In contrast, Bitcoin has fallen from its high point, failing to meet investors’ expectations.

The recent shift of IBIT returns to negative again highlights the cautious attitude toward Bitcoin investments. Market attention is focused on how much ETF-driven buying can help revive future market trends or whether it will turn into a sustained capital outflow.

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TP AI Notice

This article uses a language model based on TokenPost.ai for summarization. The main content may be omitted or may not align with facts.