Ark Invest issued a warning report indicating that investors in spot Bitcoin 
$103,767 exchange-traded funds (ETFs) in the U.S. may currently be facing losses. According to the company’s August Bitcoin monthly analysis, the average cost basis for participants in these ETFs exceeded Bitcoin’s prevailing price at the end of August, suggesting that typical ETF investors could be in a negative financial position.
U.S. Spot Bitcoin ETF Investors Face Losses
Ark Invest’s assessment is based on data obtained since the launch of U.S. spot Bitcoin ETFs in January 2024. The company utilized a flow-weighted average price method to calculate the cost basis, taking into account the investment volumes and timing for these ETFs. This approach provides a more accurate representation of the average investment cost over time for ETF participants.
In the Ark Invest report, it states, “The estimated cost basis for participants in U.S. spot ETFs was higher than Bitcoin’s price at the end of August.” This inconsistency implies that the average investor holding these ETFs may face losses given the current market conditions.
Key Factor: Direct Bitcoin Price
The launch of U.S. spot Bitcoin ETFs in January 2024 aimed to provide investors with a regulated and accessible tool for investing in Bitcoin without holding the cryptocurrency directly. However, Ark Invest’s recent report raises concerns about the profitability and sustainability of these investment vehicles under current market dynamics.
Industry analysts emphasize that the performance of spot Bitcoin ETFs is closely tied to price movements of the underlying asset. Consequently, fluctuations in Bitcoin’s price significantly impact ETF investors’ returns. Ark Invest’s bearish outlook could affect investor sentiment, potentially influencing capital inflows and outflows in these ETFs.
