<div id="readability-page-1" class="page"><div id="blog-content"><p><em>Image Source: Unsplash</em></p><p>Bitcoin’s price drop has placed the average purchase price of Bitcoin ETFs underwater. This comes after a significant outflow of funds from the funds in recent weeks. According to Alex Thorn, head of research at Galaxy, Bitcoin ETFs are now facing losses due to these outflows, which hit $2.8 billion in just two weeks. The funds hold substantial amounts of Bitcoin, but the current market downturn has left their investments below their average cost basis.</p><h2><br/>Bitcoin ETFs Struggling as Market Falls</h2><p>The U.S. Bitcoin ETFs now hold approximately $113 billion in assets under management. The funds collectively possess around 1.28 million Bitcoin, implying an average cost basis of $87,830 per Bitcoin. As Bitcoin’s price recently dropped by 11%, falling from $84,000 to $74,600, these Bitcoin ETFs are now underwater, with purchases made at a higher price than their current value.</p><blockquote><p><em>“This means the average Bitcoin ETF purchase is underwater,”</em> said Thorn.</p></blockquote><blockquote><div dir="ltr"><p>BTC is trading below the U.S. ETFs avg cost basis after the 2nd &amp; 3rd biggest outflow weeks ever (last week and week before)</p><p>(and last week’s outflow will increase after IBIT reports friday’s numbers tomorrow)</p><p>this means the average bitcoin ETF purchase is underwater pic.twitter.com/XowzrnBaSM</p></div>— Alex Thorn (@intangiblecoins) February 2, 2026</blockquote><p>This downturn follows a troubling two-week period, in which Bitcoin ETFs recorded a $2.8 billion outflow. The ETFs lost $1.49 billion in one week, and another $1.32 billion the following week. These outflows suggest a lack of confidence from investors as Bitcoin’s price struggles.</p><h2><br/>Institutional Investors Hold Strong Despite Losses</h2><p>Despite the ongoing downturn, institutional investors in Bitcoin ETFs are holding their positions. Thorn noted that the cumulative inflows into Bitcoin ETFs have only decreased by 12% from their peak, whereas Bitcoin itself has seen a larger drop of 38%. Even though the total assets under management for Bitcoin ETFs have declined by 31.5% from their October peak of $165 billion, institutional investors have been holding on to their assets.</p><p>This indicates that while the Bitcoin ETF market has experienced significant outflows, many institutional investors remain committed to their holdings, reflecting their long-term view on the asset.</p><h2><br/>Bear Market Concerns Grow as Recovery Stalls</h2><p>The recent drop in Bitcoin’s price has raised concerns about the potential for a bear market. Nick Ruck, director at LVRG Research, warned that if Bitcoin does not recover soon, it could enter a fully-fledged bear market. “BTC may enter into a bear market if it continues to drop further,” Ruck said, referencing technical indicators that show long-term sell pressure.</p><p>The ongoing decline is also compounded by broader market uncertainty. Geopolitical tensions and the struggles of the U.S. economy, including rising unemployment and inflation, have contributed to the sell-off in crypto markets.</p><hr/><p><em>More By This Author:</em></p><p>Palantir (PLTR) Stock: What to Expect From Q4 Earnings Monday<br/>The Week Ahead: Tech Earnings And Jobs Report Highlight Busy Market Week<br/>Unity Software Stock Drops 20% Following Google Project Genie Launch<br/></p></div></div>

<p>Bitcoin ETFs are facing significant losses due to a $2.8 billion outflow amid a price drop, with the average purchase price now underwater. The funds, holding about $113 billion in assets, have seen Bitcoin's price fall from $84,000 to $74,600, leading to a 31.5% decline in total assets since October. Despite this, institutional investors are maintaining their positions, reflecting a long-term commitment. Concerns about a potential bear market are growing as Bitcoin's price continues to struggle, influenced by broader economic uncertainties.</p>

- Bitcoin ETFs are currently facing significant challenges as their average purchase price is now underwater, following a market downturn and $2.8 billion in fund outflows over two weeks.  
- Despite losing $1.49 billion in one week and $1.32 billion the following week, institutional investors are largely maintaining their positions, with only a 12% decrease in cumulative inflows compared to Bitcoin's 38% drop.  
- Analysts express concern about a potential bear market if Bitcoin fails to recover from its recent decline, which is influenced by broader economic uncertainties.

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Bitcoin ETFs Face Losses As $2.8B Exits Amid Price Drop