TLDR

  • Bitcoin ETFs have retained $85 billion in assets even as Bitcoin’s price has dropped significantly.
  • The resilience of Bitcoin ETFs is largely driven by market makers and arbitrage-focused hedge funds.
  • These market players hold hedged positions rather than making long-term, directional bets on Bitcoin’s price.
  • Market makers and arbitrageurs own approximately 55% to 75% of BlackRock’s $61 billion Bitcoin ETF.
  • Market makers reduced their exposure to Bitcoin ETFs by $1.6 billion to $2.4 billion during the fourth quarter.

Bitcoin exchange-traded funds (ETFs) have withstood notable price declines and still hold billions in assets. Despite a steep drop in , ETF holdings remain robust. However, this resilience may not reflect the optimism many investors expect.

Bitcoin ETFs Resilience Reflects Market Makers’ Influence

Bitcoin’s price surged sharply above $126,000 in early October but has since fallen to around $60,000. Despite this 50% decline, the 11 U.S. spot Bitcoin ETFs collectively hold $85 billion in assets under management. Analysts note that the ETFs’ ability to retain such large sums does not necessarily signal bullish market conditions.

A key factor behind this resilience is the involvement of market makers and arbitrage-focused hedge funds. These entities frequently trade in and out of Bitcoin positions but typically do not take long-term, directional bets on Bitcoin’s price. Instead, they maintain hedged, neutral positions designed to manage risks tied to price volatility.

Markus Thielen, founder of , points out that market makers and arbitrageurs are major contributors to Bitcoin ETF holdings. These entities aim to boost market liquidity and profit from bid-ask spreads. Thielen notes that roughly 55% to 75% of BlackRock’s $61 billion Bitcoin ETF—one of the largest—is controlled by such market participants.

These market makers generally do not bet on Bitcoin’s price rising or falling. Instead, they focus on maintaining a market-neutral stance to avoid volatility. As a result, Bitcoin ETFs continue to hold significant assets even amid price swings, though this does not reflect the optimism of true Bitcoin enthusiasts.

Limited Impact of Speculative Demand

While Bitcoin ETFs hold billions, a decline in speculative demand is evident. During the fourth quarter of 2025, market makers cut their exposure to by $1.6 billion to $2.4 billion. This adjustment occurred as Bitcoin’s price hovered near $88,000, indicating that market participants were reducing speculative bets in response to weakening price momentum.

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