Bitcoin ETF Investors Show Unexpected Resilience During 40% BTC Drawdown

Bitcoin’s latest price correction has tested market sentiment, but one group of investors is holding firmer than many expected. Despite bitcoin falling more than 40% from recent highs, Bitcoin ETF investors have largely stayed put, signaling a shift in how digital assets are being held and perceived within traditional finance.

In an interview on CoinDesk’s Markets Outlook, Bloomberg Intelligence Senior ETF Analyst Eric Balchunas pointed to data showing that only about 6.6% of Bitcoin ETF assets exited during the drawdown. Historically, declines of this magnitude have triggered far more panic selling in retail-heavy crypto markets. This time, ETF investors appear to be behaving differently. Balchunas described this cohort as structurally distinct from crypto-native traders, noting that many ETF holders treat bitcoin as a small, tactical allocation rather than a core position.

For many investors, bitcoin represents a 1%–2% “hot sauce” addition to diversified portfolios that already include stocks, bonds, and other assets. Strong performance in equity markets has helped offset losses from crypto exposure, reducing emotional pressure to sell. According to Balchunas, ETF investors are also more accustomed to volatility, having lived through multiple market cycles in traditional asset classes. As a result, they “tend to hold really strong” even during sharp corrections.

This stands in contrast to investors heavily concentrated in bitcoin or using leverage. For those participants, the same price move can feel existential, increasing the likelihood of forced selling or capitulation. Balchunas suggested that leveraged traders and long-term crypto-native holders may be contributing more to current selling pressure than ETF investors.

Drawing parallels with gold ETFs, Balchunas highlighted how gold once suffered a roughly 40% decline over six months, during which about one-third of ETF assets exited. Despite that setback, gold ETFs eventually rebuilt and now hold around $160 billion. Bitcoin ETFs, which briefly rivaled gold ETFs in size before the recent selloff, may follow a similar path over time.

While volatility is likely to persist, the presence of ETFs may help anchor bitcoin’s role in mainstream portfolios. With a 17-year history of recovering from major drawdowns, bitcoin’s integration into traditional finance suggests that a selloff is not an endpoint, but simply another phase in its ongoing market cycle.