Bitcoin ETFs: Why They Look Like They’re Underperforming | Asia Morning Briefing
- Bitcoin ETFs in 2025 face challenges surpassing 2024’s inflow record, signaling a shift in market dynamics.
- ETFs are now increasingly acting as a stabilizing force in the crypto market, rather than amplifying price surges as in 2024.
- Despite ETF inflows, bitcoin consolidates around $87,000-$88,000, outperforming broader crypto while ether has underperformed.
A staggering $100 billion in unrealized losses hangs over the bitcoin ETF market, casting a shadow on its performance in 2025. The initial euphoria surrounding the launch of bitcoin ETFs has given way to a more sober assessment, as inflows struggle to match the record-breaking figures of 2024. This article dives deep into why bitcoin ETFs look like they’re falling short of expectations, the evolving role of exchange-traded funds in the crypto space, and what it all means for investors navigating this volatile landscape.
Bitcoin ETFs Look Like They’re Falling Short: An Asia Morning Briefing Perspective
The asia morning briefing paints a clear picture: bitcoin ETFs are unlikely to replicate the inflow success of 2024. Traders are assigning a minuscule chance that bitcoin ETFs will beat last year’s inflow record in 2025. This pessimism stems from a simple calculation: bitcoin ETFs pulled in $33.6 billion in net inflows during 2024, while this year’s tally hovers closer to $22.5 billion, leaving a significant gap to close with limited trading days remaining.
Unlike the launch year, which saw pent-up demand and one-time allocations, 2025 has been shaped by rotation, fee migration, and volatility-driven rebalancing. The market is maturing and the initial boost is over. The arithmetic may already be settled, but beating a benchmark before the end of the year isn’t as important. It’s about the use case: ETFs no longer amplify crypto prices, as they did when they launched in 2024.
Instead, they are increasingly acting as a stabilizing layer in the market, absorbing sell orders during pullbacks rather than amplifying price swings. That’s the sign of mature market infrastructure.
ETFs Increasingly Acting as a Stabilizing Force in the Crypto Market
The performance gap, however, doesn’t tell the whole story. ETFs are increasingly acting as a stabilizing force in the broader crypto market. Glassnode data reveals that U.S. spot bitcoin ETF flows are flipping back into positive territory even as prices softened. This suggests that ETFs are absorbing risk rather than amplifying price swings, a crucial distinction from their initial role.
ETF trading volumes have also declined, indicating less speculative churn and more allocation-driven positioning. This pattern explains why bitcoin has held up better than the broader crypto market. ETFs may be fulfilling their intended purpose for risk averse investors. The $11b gap to last year’s $33.6B record reflects how the ETF story has shifted, not that it has stalled. This underperformance reflects a structural shift: ETF flows now smooth volatility rather than amplify crypto rallies.
Key Data Comparison
| Metric | 2024 | 2025 (YTD) |
|---|---|---|
| Bitcoin ETF Net Inflows | $33.6 Billion | ~$22.5 Billion |
| Bitcoin Correlation with S&P 500 | 0.29 | 0.5 |
| Bitcoin Correlation with Nasdaq 100 | 0.23 | 0.52 |
| Gold Price (Year End) | ~$2,000/oz (estimate) | ~$4,000/oz (estimate) |
| Ethereum ETP Inflows | ~$2.5 billion (estimate) | $10.3 Billion |
Bitcoin vs Ether: Diverging Paths in the Crypto Market
While bitcoin has shown resilience, ether has underperformed over the past week. Selling pressure in higher-beta assets has intensified, with rotation favoring bitcoin. This divergence highlights the nuances within the crypto market, where different assets respond differently to market forces.
Gold climbed above $4,300 after the New York Fed’s Empire State Manufacturing Survey unexpectedly fell into contraction in December, boosting safe-haven demand as U.S. manufacturing volatility resurfaced. Investors rotated out of the U.S. AI trade, with Japan’s Nikkei 225 down 1.14% and the Topix slipping 1.05%.
Regulatory Tailwinds and the Future of Crypto ETFs
Despite the current challenges, the long-term outlook for crypto ETFs remains positive. Regulatory breakthroughs, such as the GENIUS Act and the CLARITY Act, are paving the way for greater oversight and transparency in the digital assets space. These legislative efforts, combined with SEC approval of in-kind creations/redemptions, are fostering a more favorable environment for institutional adoption.
CFRA Research highlights that the U.S. now hosts 76 spot and futures crypto ETPs with $156 billion in ETF assets, representing exponential growth since the first launches in 2021. With regulation and interest rates shaping the next phase of growth, crypto ETFs are poised for further expansion in the years to come. CFRA sees it positioned as a prime beneficiary of regulation-driven adoption.
Bitcoin ETFs: A Stress Test for the Crypto Market
Despite the positive outlook, the bitcoin ETF market is currently undergoing a stress test. With a significant portion of ETF capital hovering near the $80,000 breakeven point, analysts warn of a potential distribution phase. Checkonchain estimates that investors are carrying about $100 billion in unrealized losses, with miners pulling back hashrate and many treasury-company stocks trading below their bitcoin book value.
The distribution of ETF capital is also a key factor to watch. While the aggregate spot bitcoin ETF cost basis is around $80,000, a relatively small percentage of capital sits in the $75,000–$85,000 band. This thinner cushion could lead to faster downside moves if the market trades through this gap. According to Bitwise, there is roughly $152 billion in unrealized losses (about 6.6% of market cap) after a roughly 35% drawdown, bringing total losses to about $765 billion. A stress feature is the amount of ETF capital between $75,000 and $85,000.
The Macroeconomic Linkage: How Rates Influence Crypto’s Trajectory
The correlation between bitcoin and traditional financial markets has become increasingly pronounced. Reuters reports that bitcoin’s average correlation to the S&P 500 neared 0.5 in 2025, up from 0.29 in 2024. Similarly, its correlation with the Nasdaq 100 rose to 0.52, compared to 0.23 previously. This macro linkage means that broader economic factors, such as interest rate policies, play a significant role in shaping crypto’s trajectory.
Rates matter in that setup because they set the tone for risk appetite. Bank of America expects two more cuts in June and July 2026. That keeps the 2026 rate path near the center of the debate over risk assets.
Analyzing ETF Outflow and Inflow
While the overall trend points to strong ETF inflows throughout 2025, November saw a reversal of fortune. The iShares Bitcoin Trust ETF (IBIT) experienced its first month of outflow on record, shedding $2.3 billion. However, Ethereum ETPs have added nearly four times their 2024 totals, to $10.3 billion. Demand mirrors performance, with the asset class seeing outflows in November. Still, the iShares 0-3 Month Treasury Bond ETF (SGOV) topped the fixed income industry leaderboard with more than $35 billion in inflows, extending its streak to 25 straight months of inflows.
Deep Dive: Market Analysis
As of December 15, 2025, bitcoin is trading near $86,000, reflecting the ongoing market stress. The True Market Mean sits around $81,300, while the short-term holder cost basis is near $102,700. The $95,000 level represents an early reclaim marker, and the $75,000 mark serves as the lower bound in Bitwise’s support channel. Keep an eye on volume and key price points to gauge market sentiment. Also, be mindful of the market conditions. Loss realization is already elevated even when price rebounds.
Frequently Asked Questions
What if you put $1000 in Bitcoin 5 years ago?
The return on investment would depend heavily on the specific dates. But, generally speaking, given Bitcoin’s historical price appreciation over the past five years, the investment would have likely yielded substantial gains, potentially multiplying the initial investment several times over.
Why are Bitcoin ETFs becoming so popular?
Bitcoin ETFs offer investors a regulated and accessible way to gain exposure to bitcoin without directly owning the cryptocurrency. This appeals to institutional investors and those who prefer traditional investment vehicles.
Why won’t Warren Buffett buy Bitcoin?
Warren Buffett has publicly expressed skepticism about bitcoin, citing its lack of intrinsic value and productive capacity. He prefers investments in businesses that generate earnings and cash flow.
Do Bitcoin ETFs actually own Bitcoin?
Yes, Bitcoin ETFs actually own Bitcoin. The ETF holds actual bitcoin, providing investors with a share representing a portion of those holdings. Regulations require proof of these holdings. The ETFs buy or sell bitcoin to match supply and demand of the etf share.
Conclusion
The bitcoin ETF market is at an inflection point. While the initial surge has subsided, exchange-traded funds are playing a crucial role in stabilizing the crypto market and broadening institutional adoption. Regulatory developments and macroeconomic forces will continue to shape the trajectory of bitcoin and ether. Although certain ETFs may experience a dip, the overall adoption of ETFs may still expand. Investors should remain vigilant, monitor key metrics, and adapt their strategies to navigate this evolving landscape. Is it best to buy or sell? Time will tell.
