The Bitcoin rally, which once attracted a wave of new investors through easily accessible ETFs, has officially turned into a downtrend.

Investors in U.S. exchange-traded funds (ETFs) that provide direct exposure to the cryptocurrency are now collectively in the red. According to Sean Rose of Glassnode, the average cost basis for all ETF inflows stands at approximately $89,600—a level Bitcoin fell below on Tuesday.

The $89,600 figure reflects the flow-weighted average price of all inflows since the launch of Bitcoin ETFs. When Bitcoin trades below this level, these investors begin to incur losses. As of 9:20 AM London time, the largest cryptocurrency had pared some losses, trading around $91,000.

The breach of this key level serves as a test of endurance for both retail and institutional investors—many of whom entered the market over the past year, betting on further upside for cryptocurrencies. ETFs were once hailed as a "safer, regulated" way to invest in digital assets, but the recent price drop serves as a reminder that crypto’s notorious volatility persists, even with Wall Street’s involvement.

During Bitcoin’s rally, 12 spot Bitcoin ETFs absorbed tens of billions in new assets. However, since early November, these ETFs have seen net outflows totaling approximately $2.8 billion.

Nick Ruck, Director of LVRG Research, noted, "This steep decline has pushed most institutional buyers into losses for the first time in 2025. If market sentiment doesn’t stabilize soon, it could trigger further outflows."

This moment also highlights how quickly optimism in the crypto market can fade. After hitting an all-time high in early October, Bitcoin has since fallen roughly 30%—a pullback driven by risk-averse traders exiting and long-term holders taking profits.

Despite crypto’s reputation for volatility, the downturn has caught Wall Street off guard, given the flood of institutional capital that entered the space following Donald Trump’s presidential election win.

Billions have flowed into Bitcoin-focused ETFs this year, with demand so high that issuers have expanded beyond Bitcoin (the largest cryptocurrency) and its "cousin" Ethereum to launch even more products. Data compiled by Bloomberg shows over 110 crypto-related ETFs now trade in the U.S.

As the broader crypto market declines—with many smaller coins down more than 50% year-to-date—losses are spreading across the ETF landscape. According to CoinGecko, the total market capitalization of all digital tokens has shed $1.2 trillion since Bitcoin’s peak.