Ethereum’s slide toward $2,000 has left its exchange-traded fund (ETF) investors holding more than $5 billion in paper losses, extending a marketwide crypto drawdown that has also hit Bitcoin.
According to CryptoSlate’s data, the move has tracked a broader risk-off wave that has pushed the global crypto market value down by $2 trillion since October’s peak, with BTC and ETH both under pressure as volatility spread through other risk assets, including tech shares.
The difference for Ethereum is that a growing share of the exposure now sits inside products built for traditional portfolios, where performance is marked daily, and selling can be executed as quickly as any other listed security.
Quantifying Ethereum ETF holders losses
Over the past week, Bloomberg Intelligence ETF analyst James Seyffart has argued that the typical US spot Ethereum ETF holder is in a weaker position than Bitcoin ETF buyers.
In a post on X, he estimated the average cost basis for Ethereum ETF holders at around $3,500, and with ETH trading under $2,000, the drawdown for the average ETF holder is roughly 44%.
Applying that drawdown to about $12 billion of remaining net inflows yields paper losses of about $5.3 billion.
The magnitude reflects how the ETF era concentrates exposure.
Capital was gathered when prices were higher, and the performance of that cohort is now captured in a daily-marked vehicle held in brokerage accounts alongside equities and other liquid risk exposures.
Seyffart’s framing also highlights the relative gap versus Bitcoin’s ETF cohort.
He described Ethereum ETF holders as in a worse position than their Bitcoin counterparts, based on the gap between the current Ether price and the group’s estimated average entry price.
ETF flows show holders stayed put, even as broader fund data turned negative
Seyffart said the latest leg down pushed ETH ETF investors into a drawdown of more than 60% at the most recent bottom, broadly comparable to the percentage decline Ethereum experienced around its April 2025 low.
Tom Lee, BitMine’s chair, has emphasized how frequently Ethereum has experienced declines of that magnitude.
He said that since 2018, ETH has recorded a drawdown of 60% or worse seven times in eight years. He described the pattern as roughly annual and also pointed to 2025, when ETH declined by 64%.
That record does not soften current losses. It does, however, situate today’s price action within a recurring pattern that has characterized ETH’s market history, sharp drawdowns followed by periods of recovery.
The central question for the ETF era is whether a broader base of holders, including investors who prefer regulated brokerage products, responds to those swings in the same way as prior cycles.
Daily flow data has become the most direct tool for measuring that behavior.
On Feb. 11, US spot Ethereum ETFs recorded a net outflow of $129.1 million, led by large outflows from Fidelity’s FETH and BlackRock’s ETHA. A day earlier, on Feb. 10, the complex posted a net inflow of $13.8 million from the same dataset.
The reversal highlighted uneven positioning, with capital moving in both directions rather than exiting in a single wave.
The broader flow picture still points to a cohort that has not fully unwound.
Seyffart’s estimate that net inflows declined from about $15 billion to below $12 billion suggests meaningful redemptions, but not a wholesale retreat relative to the price decline from the $3,500 area toward $2,000.
That relative stickiness matters because ETFs compress decision-making. Investors do not need to move coins or change custody.
Exposure can be reduced the same way an equity position is trimmed, and advisors can rebalance within standard portfolio processes. In a risk-off market, that convenience can accelerate selling. It can also support holding behavior among investors who are prepared to absorb volatility.
Break-even near $3,500 could shape the next cycle’s market structure
If Seyffart’s estimate is close to accurate, around $3,500 functions as an approximate break-even level for the average Ethereum ETF holder.
During recovery, a return to that level can shift the emphasis from losses to repair. For investors who established exposure through a regulated wrapper, approaching break-even can influence whether allocations are increased, maintained, or reduced.
However, this level may also generate selling pressure. Investors who have endured a drawdown to $2,000 may opt to exit once they have recovered their initial capital.
Such selling is driven by portfolio constraints rather than by technical analysis, and ETFs exacerbate this behavior by clustering buyers within similar cost-basis ranges.
That means two paths could define the next phase.
One is macro stabilization, in which risk appetite improves, and ETFs shift from uneven leakage to renewed inflows, a dynamic that can amplify upside because the wrapper is liquid and accessible.
The alternative scenario involves a retest of the $1,800 zone, accompanied by negative flows, which would challenge the resolve of the remaining cohort.
For ETF holders, the near-term question is more operational than predictive: how will the cohort behave if ETH climbs back toward its break-even zone, and whether that level draws renewed demand or becomes a point at which selling accelerates.