This article first appeared on GuruFocus.
Crypto’s red-hot ETF boom just hit its first real stress test. After months of relentless inflows, the average cost basis for investors in US spot Bitcoin (BTC-USD) ETFs now sits near $89,600 a line the token briefly slipped below before finding its footing again around $91,100 on Tuesday morning. That flow-weighted price is more than just a number; it is the mark separating profit from pressure for a group of investors who embraced the ETF structure as a possibly safer, more regulated way into digital assets. The recent pullback could be reminding the market that Bitcoin’s volatility has not disappeared simply because Wall Street adopted the wrapper.
What’s unfolding now resembles a sentiment shift that could be gaining traction. The 12 spot Bitcoin ETFs, which pulled in tens of billions during the rally, have already recorded approximately $2.8 billion in net outflows so far in November. Nick Ruck at LVRG Research noted that Bitcoin’s sharp drop puts most of 2025’s institutional buyers underwater for the first time, a dynamic that could weigh on flows if risk appetite weakens further. This reversal follows a roughly 30% decline from the early-October peak, a move shaped by risk-averse traders stepping back and long-term holders taking money off the table despite the institutional momentum that built after President Donald Trump’s victory.
The broader digital-asset ecosystem may now be feeling the strain in full. With more than 110 crypto-focused ETFs trading in the US, products beyond Bitcoin and Ether are being pulled into the downdraft as smaller tokens nurse losses exceeding 50% this year. CoinGecko data suggests digital assets have shed about $1.2 trillion in market value since Bitcoin’s peak. For investors who saw the ETF surge as a sign that crypto could be entering a more durable phase, this downturn could be a reminder that the market still moves in fast, sentiment-driven cycles and that the next direction may depend on whether confidence stabilizes before outflows deepen.