Bitcoin exchange-traded funds could be entering a market pattern already familiar to gold ETF holders: fast growth during periods of excitement, sharp pullbacks when sentiment fades, and long stretches in which assets struggle to return to former highs.
Bloomberg Senior ETF Analyst Eric Balchunas said in a recent post that spot Bitcoin ETFs may follow a path similar to gold-backed funds because both assets depend heavily on sentiment rather than yield, earnings, or cash flow. Unlike stocks, bonds, or operating businesses, Bitcoin and gold do not produce income. Their market value is largely shaped by how strongly traders believe other buyers will want them in the future.
That structure can create powerful rallies when demand rises. It can also leave prices exposed when enthusiasm cools.
Balchunas compared BlackRock’s iShares Bitcoin Trust, known as IBIT, with the SPDR Gold Trust, known as GLD. His central point was that scarcity can drive fast gains, but scarcity alone does not guarantee steady growth. Gold and Bitcoin both have supply limits in different ways, yet demand often moves in waves.
IBIT now holds about $60 billion in assets under management, down from the roughly $100 billion level it briefly touched last October when Bitcoin reached a record high. The fund stayed above that threshold for only a few hours before falling back, reflecting the speed at which crypto-linked products can expand and contract with the price of the underlying asset.
Bitcoin recently traded near $63,000, about 30% lower since the start of the year and nearly 50% below its October peak. The pullback has weighed on ETF assets, trading activity, and broader sentiment across digital assets.
Gold has also weakened this year, though its longer-term performance remains stronger. Spot gold recently traded near $4,000 an ounce, down about 7% from the beginning of the year but still roughly 19% higher than a year earlier.
Why the gold comparison matters
The comparison to gold ETFs is important because GLD offers one of the clearest examples of how a successful commodity-backed ETF can boom, deflate, and later recover.
GLD, issued by State Street, began trading in 2004 and quickly became one of the most important commodity funds in the world. During the 2011 gold surge, its assets briefly made it the largest ETF globally. That moment marked a high point for gold-linked ETF enthusiasm.
But the peak did not last. Gold prices weakened after 2011, and GLD went through a long period of softer inflows and weaker performance. It took years for gold ETF demand to return with force. Balchunas noted that each gold cycle eventually reached a higher high-water mark, but not before long periods of stagnation tested trader patience.
His view suggests Bitcoin ETFs could see similar behavior. The products may grow rapidly during bull markets, fall sharply during downturns, and later recover when the next wave of demand arrives.
That would not be unusual for assets driven by market psychology. When the story is strong, demand can arrive quickly. When the story weakens, the exit can be just as fast.
IBIT’s fast rise and sudden retreat
IBIT has been the largest and most closely watched U.S. spot Bitcoin ETF since the products began trading. Its growth helped mark a turning point for Bitcoin’s place in mainstream financial markets, giving traders a regulated vehicle to gain exposure without directly holding the cryptocurrency.
The speed of IBIT’s rise was striking. Within months, it had joined the upper tier of U.S. ETFs by assets. Its brief move above $100 billion last October became a symbolic moment for the product and for Bitcoin more broadly.
But the retreat since then has been just as important. The drop to around $60 billion shows how much of an ETF’s asset base can depend on the price of the underlying asset rather than new money entering or leaving the fund. When Bitcoin falls, the value of the ETF’s holdings falls with it.
Digital-asset funds can therefore appear to grow dramatically during price rallies even if the number of shares does not increase at the same pace. The reverse is also true during downturns. A falling Bitcoin price can reduce assets under management quickly, even without extreme redemptions.
That is one reason crypto ETF asset totals can shift faster than those of funds tied to broader stock indexes or bond portfolios.
Sentiment remains the main driver
The broader point behind Balchunas’ comparison is that Bitcoin and gold are not valued like traditional income-producing assets. A company can be judged by revenue, profit, margins, debt, and cash flow. A bond can be valued by yield, credit quality, and maturity. Gold and Bitcoin have different foundations.
Gold has centuries of history as a store of value, a reserve asset, and a hedge against currency risk. Bitcoin has a shorter record but is often described by its supporters as digital scarcity, a hedge against monetary debasement, and an alternative financial network.
Still, neither asset pays dividends or interest. That makes market perception especially important.
When traders believe inflation risk is rising, central banks are losing credibility, or political uncertainty is increasing, gold may benefit. When traders believe digital scarcity is gaining acceptance or monetary policy will become more supportive of risk assets, Bitcoin may benefit.
When those beliefs fade, prices can weaken sharply.
This reliance on public mood can produce short bursts of intense buying followed by long periods of flat or negative returns. Earlier this year, market data showed more than $1.3 billion leaving these products in a single week, underlining how quickly confidence can change when prices stop rising.
BlackRock’s digital-asset exposure declines
The sustained weakness in Bitcoin and Ether has also reduced BlackRock’s reported digital-asset holdings.
BlackRock’s total digital-asset holdings were approximately $49 billion in the second quarter, down about 40% from nearly $80 billion a year earlier. Much of that decline reflects lower cryptocurrency prices and weaker inflows across the sector.
Ether-linked funds have also faced pressure. Like Bitcoin, Ether remains highly sensitive to changes in risk appetite, liquidity expectations, and sentiment toward digital assets. Although Ethereum has a broader role in decentralized applications, stablecoins, and tokenization projects, its market price still tends to move with the wider crypto cycle.
That has made spot Ether ETFs vulnerable to the same broad forces affecting Bitcoin funds. When enthusiasm for crypto exposure fades, both categories can suffer outflows or weaker new demand.
After several weeks of outflows, however, U.S. spot Bitcoin and Ether ETFs recently returned to combined net inflows. That marked their first positive week since early May and suggested that some trading interest had returned even as prices remained below prior highs.
The shift does not necessarily mean the downturn is over. But it shows that demand has not disappeared. In crypto markets, inflows can revive quickly when prices stabilize or when traders begin positioning for a possible rebound.
U.S. demand dominates global flows
Another feature of the current market is the heavy role of U.S. demand.
Recent market data showed American institutions accounting for more than 96% of global weekly money flowing into these products. That concentration highlights the importance of U.S. macroeconomic conditions, regulatory expectations, and interest-rate policy for the digital-asset ETF market.
When demand is concentrated in one country, local developments can have an outsized impact. U.S. inflation reports, Federal Reserve signals, Treasury yields, employment data, and regulatory actions can all influence flows into Bitcoin and Ether ETFs.
Higher interest rates often create a tougher backdrop for assets that do not produce income. When traders can earn attractive yields in Treasury bills or money-market funds, the opportunity cost of holding Bitcoin or gold rises. Lower rates can have the opposite effect by making non-yielding assets more appealing.
That does not mean Bitcoin and gold always move in the same direction as interest rates. Their prices are shaped by many forces at once. But rate expectations remain an important part of the market backdrop.
Volatility is part of the structure
The recent decline in Bitcoin ETFs is not only a story about crypto. It is also a story about how themed and commodity-backed ETFs behave when the underlying asset becomes volatile.
ETFs provide easier access, but they do not remove the risk of the asset they hold. A spot Bitcoin ETF still moves with Bitcoin. A gold ETF still moves with gold. The wrapper may improve convenience, custody, and trading access, but it cannot eliminate price swings.
That is especially relevant for products tied to assets whose value rests heavily on future demand. When traders crowd into the same theme, momentum can build quickly. When the theme loses strength, the same structure can amplify the retreat.
Behavioral finance has long studied this pattern. Research associated with Daniel Kahneman and Amos Tversky showed that people often react more strongly to losses than to gains and that financial decisions can become more emotional as the stakes grow. In markets such as Bitcoin, where price moves are large and public attention is intense, those emotional pressures can become especially visible.
That helps explain why rallies can overshoot and sell-offs can deepen. It also helps explain why an ETF can attract large inflows during a high-profile run, only to see demand slow when the asset stops setting records.
The gold ETF lesson
Gold’s ETF history offers a useful reminder that strong long-term demand does not prevent long pauses.
GLD’s rise after its 2004 launch helped open gold exposure to a wider trading audience. Its assets surged as gold climbed into 2011. Then came years of weaker performance and reduced enthusiasm. Many traders who bought near the peak had to wait a long time for the market to regain similar momentum.
Yet gold did not disappear from portfolios, central-bank reserves, or global markets. It went through a cycle.
Balchunas’ comparison suggests Bitcoin ETFs may face the same kind of test. Early enthusiasm can be real while still being cyclical. A fund can become large and successful without moving upward in a straight line.
For Bitcoin ETF traders, the key question is whether current weakness is a temporary correction within a longer adoption cycle or the beginning of a longer plateau similar to gold’s post-2011 period.
The answer will depend on several factors: Bitcoin’s price trend, ETF flows, regulatory stability, institutional demand, macroeconomic conditions, and whether digital assets can maintain a compelling narrative beyond speculation.
Market attention turns to fund flows
For now, ETF flows remain one of the clearest indicators of sentiment.
Positive weekly inflows after a run of withdrawals suggest some buyers are returning. But the market remains far below the excitement seen when Bitcoin reached its October high and IBIT briefly crossed $100 billion in assets.
The next phase may depend less on headlines and more on whether demand can stay consistent without a record price to chase. Sustained inflows during a flat or falling market would signal stronger conviction. Continued outflows during price weakness would point to a more fragile base.
Gold ETFs have shown that recovery can take years, but also that each cycle can eventually produce new highs. Bitcoin ETFs are much younger, and their full cycle has not yet been tested over the same length of time.
What is clear is that the first phase of explosive growth has already met its first major period of pressure. The comparison with gold suggests that this may be a normal part of the development of a large, sentiment-driven asset class rather than an exception.
Bitcoin ETFs changed access to the cryptocurrency market. They did not change Bitcoin’s volatility. As long as demand is driven mainly by confidence, scarcity, and expectations of future buyers, sharp rallies and long pauses are likely to remain part of the market’s character.
Learn how emotion drives ETF cycles in detail—read this guide on crypto market sentiment next.
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