By Brett Munster
ETFs hold strong
At the end of last year, we highlighted one of the most consequential structural shifts in the bitcoin market: the simultaneous selling of long-dormant coins by early adopters and the aggressive accumulation by institutional investors. This narrative—early “whales” selling while institutions buy—was not merely headline fodder. It represented a meaningful transfer of supply that is likely to shape bitcoin’s market dynamics for years to come.
As bitcoin surged past $100,000, early adopters—many of whom had accumulated coins for under $1,000—began realizing extraordinary profits. On-chain estimates indicate that coins held for five years or more, largely acquired at these very low cost bases, sold roughly $52 billion worth of bitcoin in 2025 alone. For holders sitting on 100x appreciation or more, profit-taking was both rational and prudent. Yet despite this extraordinary sell pressure, bitcoin climbed to new all-time highs in 2025, supported by a powerful countervailing demand force capable of absorbing that supply. That force was driven primarily by inflows into bitcoin exchange-traded funds.
U.S. spot bitcoin ETFs collectively attracted tens of billions of dollars in net new inflows throughout 2025, rivaling the annual flows of established ETF giants such as SPDR S&P 500 ETF Trust and Invesco QQQ Trust. In fact, in 2025 alone, iShares Bitcoin Trust drew approximately $25 billion in net investment, placing it among the top ETFs globally by flows. Even more important than the absolute dollar amount was the composition of ownership. The share of bitcoin ETF holdings attributable to institutional investors rose steadily throughout the year and now makes up nearly 40% of total ETF assets. This shift reflects a markedly different investor profile—one defined by lower turnover, longer time horizons, and a fundamentally distinct approach to risk.
This influx of capital was pivotal in propelling bitcoin to new all-time highs in October 2025. Persistent ETF demand absorbed the steady stream of supply distributed by long-term holders and established a durable institutional bid beneath the market. When those inflows moderated in the fourth quarter and broader risk sentiment cooled following the peak, bitcoin retraced sharply—underscoring just how central ETF demand had become to price stability. Yet even as net inflows stalled through much of Q4 and into this year, ETF investors largely refrained from significant selling.
While bitcoin ETFs have recorded intermittent net outflows since late 2025, those withdrawals have been modest relative to the cumulative assets amassed since launch. Total BTC held by ETFs is down roughly 6% from the early October all-time high. In other words, despite a price drawdown exceeding 50%, only about 6% of ETF-held supply has been distributed—clear evidence of consolidation rather than capitulation among this investor base.
Crucially, some large institutional allocators have used the weakness to build positions. 17 out of top 25 largest bitcoin ETF holders increased their positions in Q4, including Abu Dhabi’s Al Warda Investments, even as prices weakened. Earlier in the cycle, Harvard University and other institutions also meaningfully increased their allocations to bitcoin ETFs, reinforcing the view that institutional dollar-cost averaging persists despite volatility.
Viewed through a behavioral lens rather than through headline flow data, this pattern is striking. During the downturn, spot bitcoin holders outside ETF structures have accounted for the majority of selling, responding to falling prices and macroeconomic uncertainty. ETF holders, by contrast, have largely held their ground. In market parlance, this cohort has demonstrated “diamond hands,” maintaining exposure through volatility without succumbing to emotion-driven selling.
This shift matters because it fundamentally alters the ownership structure of bitcoin supply. The market is transitioning from a holder base dominated by early adopters with deeply asymmetric cost bases to one increasingly composed of institutional allocators who largely accumulated in the $80,000 to $100,000 range. Legacy holders, sitting on extraordinary gains, are naturally inclined to realize profits over time. Institutional investors—pension funds, endowments, and other long-horizon fiduciaries—are, on average, still underwater. With an estimated average ETF cost basis of roughly $85,000, these investors have little incentive to sell into weakness. Their objectives—portfolio diversification, long-term return generation, and fiduciary alignment—are inherently incompatible with short-term trading.
For the same reason, these investors are also less likely to sell simply because bitcoin reclaims the $100,000 level. That price represented generational wealth creation for early holders, but for institutions that began allocating only in the past two years, it implies relatively modest gains. It is far more likely that this cohort is targeting substantially higher prices before reconsidering its exposure.
As a result, the rise of this high–cost basis, long-duration investor base does more than absorb incremental supply; it reshapes bitcoin’s market structure. Approximately 6% of total bitcoin supply now resides within ETF vehicles, reducing free float and introducing a measure of structural stability previously absent from the market. As ETFs continue to grow within broader asset allocation frameworks, the share of bitcoin held by investors willing and able to endure volatility is likely to increase further.
In effect, a new foundation of durable holders is forming. This is not an abstract observation. When the next bull cycle emerges, bitcoin will not be advancing from the same distribution of ownership seen last cycle. Instead, it will build upon a base of investors predisposed to hold for significantly higher prices, rather than early adopters monetizing 100x gains.
In sum, while market narratives have focused on price drawdowns and episodic ETF outflows, the deeper signal is one of maturation and resilience. Institutional bitcoin ETF holders have largely remained committed through the downturn and, in some cases, have used weakness as an opportunity to add exposure. This cohort represents a new class of long-term bitcoin investor—one whose conviction and structural influence may ultimately prove to be the most enduring legacy of this cycle.
In Other News
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Bitcoin approaches “late bear market territory” as regime signals echo 2022 bottom.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital or Onramp Invest.
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