Average Bitcoin ETF Investor Turns Underwater After Heavy Outflows

Bitcoin is trading below the average cost basis of US spot Bitcoin exchange-traded funds after the products recorded their second- and third-largest weekly outflows on record last month, according to research from Alex Thorn, head of research at Galaxy.

US spot Bitcoin ETFs now manage roughly $113 billion in assets and collectively hold about 1.28 million BTC, according to BiTBO.

That puts the average purchase price for ETF-held Bitcoin at approximately $87,830 per coin, well above current market levels.

Bitcoin Slides to Nine-Month Low, Leaving ETF Buyers Underwater

Bitcoin fell about 11% over the weekend, sliding from near $84,000 to a nine-month low around $74,600 in early Monday trading.

“This means the average Bitcoin ETF purchase is underwater,” Thorn said in a post shared alongside the data.

Outflows have accelerated in recent weeks. The 11 US spot Bitcoin ETFs recorded roughly $2.8 billion in net redemptions over the past two weeks, including $1.49 billion last week and $1.32 billion the week prior, according to Coinglass.

The sustained withdrawals mark a sharp reversal from the strong inflows seen late last year.

Despite the drawdown, Thorn said institutional investors appear to be holding their positions better than the price action might suggest.

Total assets under management for spot Bitcoin ETFs have fallen about 31.5% from their October peak of roughly $165 billion, while Bitcoin’s price is down close to 40% over the same period.

Cumulative ETF inflows, however, are only about 12% below their peak, indicating limited outright capitulation by longer-term holders.

BTC is trading below the U.S. ETFs avg cost basis after the 2nd & 3rd biggest outflow weeks ever (last week and week before)

(and last week’s outflow will increase after IBIT reports friday’s numbers tomorrow)

this means the average bitcoin ETF purchase is underwater pic.twitter.com/XowzrnBaSM

— Alex Thorn (@intangiblecoins) February 2, 2026

Still, concerns are growing that weakening demand could deepen the downturn. Nick Ruck, director at LVRG Research, warned that Bitcoin risks sliding into a prolonged bear market if buying interest fails to return.

He pointed to ongoing macro uncertainty, geopolitical tensions and investor de-risking as key headwinds, adding that technical indicators are beginning to reflect sustained sell pressure.

Whether ETF flows stabilize in the coming weeks may prove critical in determining whether Bitcoin can regain momentum or faces further downside.

Morgan Stanley’s Bitcoin ETF Seen as Strategic Bet, Not Inflow Play

Morgan Stanley’s planned spot Bitcoin ETF may be less about attracting large inflows and more about securing a long-term strategic position in crypto, according to Jeff Park, chief investment officer at ProCap.

Park said the move offers reputational and institutional benefits that extend beyond near-term fund performance, helping the bank strengthen its standing in digital assets even if the ETF does not become a market leader.

The comments followed Morgan Stanley’s filing with the US Securities and Exchange Commission to launch a spot Bitcoin ETF alongside a Solana-linked product.

Park argued that the filing signals a broader crypto push tied to the bank’s brokerage arm, ETRADE, and its efforts to expand crypto trading access and tokenization partnerships.

He said simply offering a Bitcoin ETF positions the firm as forward-looking and could help attract both clients and talent.