Bitcoin has moved back above the estimated cost basis of US spot Bitcoin ETF holders, putting the average investor back into profit for the first time since January and creating a new supply dynamic for the market.
Bloomberg ETF analyst James Seyffart wrote on Monday that the average Bitcoin ETF holder was back above water after the latest rally pushed BTC above an estimated cost basis of $81,722 per coin.
The cryptocurrency climbed above $86,000 during the session, reaching roughly $86,837 before pulling back. The move came despite the Clarity Act being blocked last week and the Federal Reserve raising interest rates.
Bitcoin had also faced heavy selling earlier in the month, with US spot Bitcoin ETFs recording roughly $450.4 million in outflows on September 15 and another $295.9 million on September 16.
The Cost Basis Could Change Where Supply Appears
Bitcoin’s move above the $81,722 estimated ETF cost basis removes the loss constraint that had kept some holders from selling. Positions accumulated around that level can now be reduced at breakeven or above, potentially bringing previously inactive supply back into the market.
That supply is likely to matter most as BTC moves further into the $80,000s. Holders who waited through the drawdown can take profits into strength, while newer buyers need to absorb those orders to keep price moving higher. The move from roughly $75,000 on September 15 to a high of $86,837 has therefore changed market positioning.
This means Bitcoin is now trading into a group of ETF holders with the option to monetize their positions, with the amount of supply that reaches the market depending on spot demand strength and ETF creations.
If new demand absorbs the selling, the cost basis becomes a level the market has reclaimed. But if it weakens as holders begin reducing exposure, the same area can become a source of resistance.
ETF Flows Have Already Reversed
After combined outflows of roughly $746 million on September 15 and 16, the funds recorded about $159.5 million of inflows on September 17 and $324.6 million on September 18.
The weekly net result remained relatively small because of the earlier withdrawals, but the reversal came as the OG cryptocurrency recovered from roughly $75,000 to above $86,000.
Continued creations would add spot demand as ETF holders profit, while renewed redemptions could add supply around the same levels where existing holders are considering exits.
The Federal Reserve’s rate hike adds pressure to the liquidity backdrop, with higher rates tightening financial conditions even as ETF flows turned positive.
Meanwhile, more than $750 million in crypto positions were liquidated during the latest rally, including about $648.3 million in short positions, according to CoinGlass data.
Those shorts forced buying into the rally and helped push Bitcoin through the $81,722 cost basis. But that demand can disappear quickly once vulnerable shorts are cleared, leaving price more dependent on discretionary spot demand.
At writing time, Bitcoin was trading at around $85,400, with ETF holders collectively back in profit, while the flows turned positive and most of the short positioning behind the latest move already cleared.
Existing ones now have more room to sell into strength, while the forced demand from liquidated shorts is fading. Continued ETF creations and fresh spot buying would need to absorb that supply to keep Bitcoin above the cost basis.
About The Author
