Eric Balchunas argues that the historical trajectory of gold ETFs provides the most relevant blueprint for Bitcoin ETF investors — one that notably includes an extended eight-year period of stagnation before prices eventually broke out to new highs.
BlackRock’s IBIT Bitcoin ETF has recently liquidated nearly 100,000 BTC to meet investor redemptions, reducing its total holdings to just over 733,000 BTC. This comes as Bitcoin has rebounded close to 10% after dipping below $57,000 in early July 2026 — a decline that marked a drop of more than 50% from its October 2025 peak above $126,000.
Against this backdrop, Balchunas, a senior ETF analyst at Bloomberg Intelligence, has presented what can be viewed as a structural interpretation of the market. He points to the 22-year history of gold ETFs as the most useful comparison for understanding how Bitcoin ETFs may evolve.
This perspective moves beyond short-term market stress and instead focuses on the underlying nature of investment vehicles tied to non-yielding assets. These products rely heavily on investor sentiment rather than traditional fundamentals, shaping both price action and investor expectations over time.
The key issue now is not whether Bitcoin ETFs will face periods of decline, but whether investors are prepared for the possibility of a prolonged consolidation phase — much like gold experienced before reaching new highs.
Why Sentiment Drives These Markets
In a Bloomberg article published on July 17, Balchunas explained that both gold ETFs like GLD and Bitcoin ETFs are essentially structures built around assets that do not generate income. As a result, their valuations are driven primarily by shifts in investor sentiment rather than earnings or cash flows.
This makes them particularly sensitive to changes in demand, often leading to sharp and rapid price swings. For instance, GLD briefly became the largest ETF globally in 2011 but took years to recover that position after losing momentum.
Balchunas draws a parallel with IBIT, emphasizing that demand for such products is inherently cyclical. Since their debut in January 2024, U.S. spot Bitcoin ETFs have attracted approximately $38 billion in net inflows, marking one of the fastest growth trajectories in ETF history.
Meanwhile, gold’s total market capitalization has climbed to nearly $28 trillion since the launch of gold ETFs in 2004, highlighting strong long-term growth despite intermittent periods of weakness.
Institutional Flows as a Buffer
The recent outflows from IBIT serve as a key indicator of short-term market pressure. Analysts note that ETF flows are crucial in determining price direction, and the sale of nearly 100,000 BTC underscores how quickly sentiment-driven withdrawals can influence the market during uncertain macro conditions. Bitfinex analysts have warned that continued outflows could undermine the current recovery.
However, Simon-Peter Massabni of XS.com points out that institutional demand remains more resilient than the headline data suggests. According to him, steady inflows into spot Bitcoin ETFs from large investors have helped cushion the market during pullbacks.
This distinction supports Balchunas’ view that institutional participation may provide a stabilizing effect, potentially limiting the depth and duration of downturns compared to gold’s prolonged stagnation. Still, IBIT’s ongoing redemption activity leaves the long-term outcome uncertain.
Rising Highs Over Time
Despite short-term volatility, Balchunas maintains an optimistic long-term outlook. He notes that each cycle in gold ETFs has ultimately resulted in higher peak valuations, suggesting that Bitcoin’s fall from above $126,000 could simply be part of a broader upward trend.
For Bitcoin ETF investors, the critical question is whether current weak demand will be reversed by a macro catalyst — such as changes in Federal Reserve policy — or whether the market will enter a longer period of sideways movement similar to gold after 2012.
While Bitcoin’s rebound from sub-$57,000 levels aligns with this framework, it is not yet definitive proof. The gold ETF precedent indicates that a lack of yield is not necessarily a disadvantage; instead, sentiment plays the dominant role, and recovery unfolds according to its own cycle.
