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The recent drop in Bitcoin prices has been a wake-up call for both regular and institutional investors. The total dollar-weighted returns in BlackRock’s iShares Bitcoin Trust (IBIT) have now gone below zero. Bob Elliott, Chief Investment Officer at Unlimited Funds, says that as of late January 2026, the average dollar invested in IBIT is losing value. This is because Bitcoin fell from its October peak of over $125,000 to the mid-$70,000 area.
This change doesn’t affect the first investors, who are still making a good profit if they bought in before the ETF or in the first few months after it launched. Instead, it shows how dollar-weighted performance works: throughout the 2025 bull run, more and more money went into the fund at higher and higher prices. When the price changed, the biggest inflows that came in later were the ones that were hurt the most right away, bringing the overall average return below zero.
Elliott’s chart, which has been shared widely on financial Twitter and analyst channels, shows how much money investors have made since IBIT started in January 2024. In October 2025, when Bitcoin hit historic highs, the line reached its highest point, over $35 billion. The whole position has gone negative for the first time by the end of January 2026. This shows how much later inflows have affected the balance.
Why Dollar-Weighted Returns Matter More Than Time-Weighted
Most casual investors just look at time-weighted performance, which is the change in the fund’s NAV over time. That number is still quite good for IBIT because the fund started out with a low Bitcoin price and has made a lot of money since then. But dollar-weighted returns show the tale from the investor’s point of view: they give each dollar invested a weight based on when it entered the fund.
When inflows are substantially back-loaded, which means that more money comes in near the peak of the market, any significant drop in value makes dollar-weighted returns go down, even if the asset is still worth more than it was when it first came out. In IBIT, this is exactly what happened. Early adopters and people who consistently dollar-cost average are still making money, but the huge amount of money that came in during the late summer and fall rise has wiped out those gains overall.
BlackRock’s iShares Bitcoin Trust is still one of the most successful ETF launches ever. It reached $70 billion in assets under management faster than any other fund. But the present negative dollar-weighted return is a strong reminder that size and popularity do not shelter investors from the agony of buying near cycle highs.
ETF Outflows Speed Up as Mood Gets Worse
The drop in dollar-weighted returns happens at the same time as the rise in withdrawals from digital asset investment products. CoinShares said that Bitcoin funds lost around $1.1 billion for the week ending January 25, 2026. This was the greatest weekly withdrawal since mid-November. In that same time frame, total outflows from crypto funds hit $1.73 billion.
CoinShares said that three key things were causing the selling pressure:- Lessening hopes for big cuts to interest rates by the Federal Reserve in the near future
– Prices went down after Bitcoin couldn’t stay above $100,000
– Disappointment that digital assets haven’t been a big part of the so-called “debasement trade” yet
The debasement trade is the idea that Bitcoin should protect against too much government borrowing and currency dilution. Gold has been going up for years and recently hit new all-time highs above $5,400 per troy ounce. Bitcoin, on the other hand, has not been able to keep up with that performance in the last few months, which has caused some investors to switch back to traditional safe-haven commodities.
The Crypto dread & Greed Index has been in the “extreme fear” range since December 13. On Wednesday, January 28, it was at 23. This protracted period of worry is due to a mix of macroeconomic uncertainty, geopolitical risk, and the technical damage from the October flash crash, which wiped out $19 billion in leveraged positions.
Bitcoin’s Current Technical State
Even if the sentiment reading was bad, Bitcoin has started to stabilize. The asset fell to a low of around $80,000 in November, but it has since bounced back to the $90,000–$95,000 level. Technical analysts say that Bitcoin is currently trading above its 21-day moving average, which is a short-term support level that has worked as a floor during corrections in the past. If the price can stay above this line and clearly get back to $100,000, it would show that the rising trend is back. If you don’t do this, though, it could lead to a deeper test of $85,000 or below.
The derivatives markets are still high, but they are not yet too high. Open interest in Bitcoin perpetual futures has been continuously rising, although it hasn’t reached the very high levels that were witnessed before the October liquidation event. Funding rates are positive but not very high, which means that long positions are still paying shorts instead of the other way around.
Read also: The First Fed Chair Who Supports Bitcoin? Who is Kevin Warsh?
What This Means for People Who Invest
The negative dollar-weighted return in IBIT is a sobering reminder that timing is important, especially when investing through regulated instruments. Investors who got in later in 2025 at higher prices are now losing money on average, but those who got in earlier and consistently dollar-cost averaged are still making money.
For new investors looking to get into Bitcoin, the current situation is both good and bad. In the past, severe anxiety readings, large ETF outflows, and a price consolidation near important technical support levels have all made for good entry points. At the same time, macroeconomic uncertainties, inflation risks due to tariffs, and the possibility of a more cautious Fed approach all make it likely that the market will keep going down.
Owen Lau of Clear Street still thinks the long-term prognosis is good. He told CNBC that “retail will be more excited to get into crypto, and institutions will be more excited to get into crypto,” as long as the Fed keeps easing its policy until 2026. The most important thing will be whether lower rates will eventually offset the current problems and make people want to take more risks.
For now, Bitcoin’s ability to stay above $90,000 even if a lot of money has left and people are feeling bad about it shows that there is still a lot of demand. In the next few weeks, it will probably become evident if that bid is strong enough to propel the price back up to $100,000 or whether more downside is needed to get rid of the last weak hands.
