Bitcoin ETF Holders Return to Profit as Price Nears $87,000

Holders of bitcoin exchange-traded funds have returned to profitability following the digital asset's most recent rally.

Bloomberg ETF analyst James Seyffart posted on X on Monday that the Monday morning rally in New York pushed the average investor above the estimated ETF cost basis of $81,72, a first since January.

Despite last week's blocking of key crypto legislation, the Clarity Act, and an interest rate hike by the Federal Reserve, bitcoin climbed above $86,000. The cryptocurrency recently traded near $86,772, having reached as high as $86,837 earlier in the session.

The current price is more than 30% below last year's all-time peak of $126,080.

U.S. bitcoin ETFs, overseen by firms such as BlackRock, Fidelity, Grayscale, and Morgan Stanley, recorded net positive inflows exceeding $6 million last week. On Thursday and Friday, investors returned to purchasing shares, funneling nearly $593 million into these products, per Farside Investors data.

In August, bitcoin began to rally after the Treasury Department announced it would least double the size of its long-dated bond buybacks. The cryptocurrency subsequently enjoyed its strongest week since 2023.

Bitcoin reached a record high in October, but the rally ended later that month following the largest liquidation event in crypto history, which saw over $19 billion in positions closed.

The digital asset kept falling after the Federal Reserve signaled it was not rushing to cut interest rates, and as investors increasingly allocated capital to artificial intelligence stocks.

However, bitcoin has since shrugged off reports of the Federal Reserve turning hawkish, as investors flock back to the so-called debasement trade.

In 2024, the Securities and Exchange Commission authorized the trading of bitcoin ETFs in the U.S., and these funds achieved the most successful launch ever for such investment products.

Investors who were previously deterred by the complexities of cold storage and private keys can now purchase shares that trade on stock exchanges and track the price of bitcoin.

These ETFs, managed by other leading Wall Street fund managers, now hold $98.8 billion in total assets, according to Coinglass data.