Bitcoin ETFs Hold $85B Amid Price Decline, but Resilience Masks Truth

TLDR

• Bitcoin ETFs have maintained $85 billion in assets despite a significant drop in Bitcoin’s price.
• Market makers and arbitrage-focused hedge funds largely drive the resilience of Bitcoin ETFs.
• These market participants hold hedged positions rather than making long-term, directional bets on Bitcoin’s price.
• Around 55% to 75% of BlackRock’s $61 billion Bitcoin ETF is owned by market makers and arbitrageurs.
• Market makers trimmed their exposure to Bitcoin ETFs by $1.6 billion to $2.4 billion during the fourth quarter.

Bitcoin exchange-traded funds (ETFs) have weathered significant price declines and still manage to hold billions in assets. Despite a sharp drop in Bitcoin’s price, ETF holdings remain strong. However, this resilience might not reflect the optimism that many investors expect.

Bitcoin ETFs Resilience Reflects Market Makers’ Influence

Bitcoin’s price saw a sharp peak above $126,000 in early October but has recently fallen to near $60,000. Despite this 50% drop, the 11 spot Bitcoin ETFs in the U.S. collectively hold $85 billion in assets under management. According to analysts, the ETFs’ ability to hold such large amounts doesn’t necessarily signal bullish market conditions.

One of the key factors in this resilience is the involvement of market makers and arbitrage-focused hedge funds. These entities often trade in and out of Bitcoin positions, but they do not typically take long-term, directional bets on Bitcoin’s price. Instead, they operate with hedged, neutral positions designed to manage risks associated with price volatility.

Markus Thielen, founder of 10x Research, points out that market makers and arbitrageurs contribute substantially to Bitcoin ETF holdings. These entities act to create liquidity in the market and profit from the bid-ask spread. Thielen mentions that around 55% to 75% of BlackRock’s IBIT ETF, which holds $61 billion in assets, is controlled by such market participants.

These market makers are not typically betting on Bitcoin’s price appreciation or decline. Instead, they focus on maintaining a market-neutral stance to avoid volatility. As a result, Bitcoin ETFs continue to hold substantial assets even amid price fluctuations, but this doesn’t reflect the optimism of true Bitcoin enthusiasts.

Limited Impact of Speculative Demand

While Bitcoin ETFs hold billions, the decline in speculative demand is apparent. During the fourth quarter of 2025, market makers reduced their exposure to Bitcoin ETFs by $1.6 billion to $2.4 billion. This move came as Bitcoin’s price hovered near $88,000, signaling that market participants were reducing speculative bets in response to declining price momentum.

This decrease in exposure shows that market makers and arbitrage-focused hedge funds are actively adjusting their positions. They aren’t staying committed to long-term positions in Bitcoin but are instead focused on managing risk and profiting from short-term market movements. Therefore, Bitcoin ETFs’ impressive asset totals might be masking a deeper, more cautious approach from market participants.

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