The Breakdown - BlackRock's Bitcoin ETF Is $13 Billion Underwater

Episode Date: June 10, 2026

BlackRock's IBIT is sitting about $13 billion underwater on its Bitcoin holdings. Every ETH ETF is in the red. David walks through which funds bought the top, which took profit, and what happens to crypto if ETF holders finally crack. Plus: a preview of DAS Asia and DAS London, and the SpaceX pre-IPO trade on Hyperliquid. TIMESTAMPS: (00:00) Intro (01:16) Crypto ETFs (15:54) DAS Events 2026 (18:07) SpaceX Perps FOLLOW THE SHOW › David — https://x.com/dcanellis › The Breakdown — https://x.com/TheBreakdownBW › The Breakdown Newsletter — https://blockworks.com/newsletter/the-breakdown Get top market insights and the latest in crypto news. Subscribe to the Blockworks Daily Newsletter: https://blockworks.co/newsletter/ DISCLAIMER As always, remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely their opinions, not financial advice.

It is Wednesday, June the 10th. Welcome back to The Breakdown. I'm your host, David Canales, and this morning, I've got a few quick things for you. We're looking at ETFs again, but we're going to zoom into each ETF to understand, are they ahead on the crypto that they've bought? How are these funds doing at a material level from a profit and loss standpoint? We're going to take a look at which funds might come under psychological pressure as we go forward through the Bitcoin bear market.

We're going to be looking at pre-stocks, so pre-IPO perps, ahead of SpaceX's IPO, which is happening over the next few days. We're going to be take a look at the market reaction leading up to what is said to be the biggest IPO of all time. So we're going to be taking a look at that. Was it going to have a quick preview into Blockworks Digital Assets Summit events for the rest of the year? So enough out of me. This is the breakdown. Let's get to it. Nothing said on the breakdown is a recommendation to buy of cell securities or tokens.

This podcast is for informational purposes only and interviews expressed by anyone on the show are opinions, not financial advice. Host and guests may hold positions in the company's funds or projects discussed. So first I just want to explain what this is. It's just a little bit of fun. So like I'm sure if you're browsing crypto headlines, you know, daily, weekly, whatever it is, you would see like the lower tier crypto media run headlines like BlackRock is selling this much of this cryptocurrency or whatever. And it's like they're referring to ETF outflows. And okay, like on a functional level, and I know that there's in-kind redemptions and so on these days.

But on a conceptual level, it makes sense. You have BlackRock who is essentially the custodian. You have BlackRock who is essentially wrapping Bitcoin into an ETF wrapper and then selling that ETF wrapper to investors. And so when those investors dump their ETF holdings, it is technically BlackRock dumping their holdings. it's actually the shareholders that are doing it. But what I've done here is I have taken the daily net flows for spot ETFs across Bitcoin, ether, and so on, and looked at the performance as if it was an actual fund, if it was just one homogenous entity that is deciding to buy and sell on these days

and trying to determine what is the profit and loss, what is the cumulative profit and loss for each Bitcoin ETF? because different ETFs have different shareholder profiles. So some, let's say Fidelity, they might really like buying the dip. So Fidelity's Bitcoin ETF might technically be in a much higher profit than what another ETF might be that has a class of shareholders that doesn't like buying the dip that actually likes buying the top. And if those shareholders keep buying the top through the ETF wrapper,

then they're going to be at a much deeper loss compared to other ETFs. So this is essentially what the analysis is, and it's just trying to understand, like, is it a BlackRock shareholders overall, are they ahead on their ETS to date? Are they behind? So let's take a look.

I have this up on my screen. I have a chart here, and again, if you're just listening to audio, I'm going to do my best, as always. So what we're looking at, the price of Bitcoin is in the yellow line, here, the yellowish line. And if you're a fund,

whether you're an ETF or not, like the whole game is to beat the underlying asset, right? So what we can actually see is that BlackRock's iBit is actually heavily underwater in terms of its Bitcoin holdings. I'm going to flip to another chart that zooms in specifically onto iBit, so you can see the relationship between its profit at loss and its net flows. So you can actually see that iBit in the blue here is actually the worst performance. ETF of the bunch in terms of its profit and loss. I'm not talking about the price of the

ETF again. I'm talking about the underlying performance of the fund. And you see that Ibit is the worst. And that's likely a function of just it is the biggest. So it has had continual flows into Ibit no matter really what the price has been doing, which means that there's been a lot of people in Ibit that have bought the top effectively is what this means. But the same trend is also happening to the rest of the Bitcoin ETFs. The other one that's underwater is BitB and the rest are basically just about breaking even right now. But what it converts to iBid is actually that it is around $15, 16 billion in the red on its Bitcoin flows to date. So I'm going to show a zoomed in version of this now. And this is now specifically iBit. So we can see closer exactly what I'm talking about.

So again, the price of Bitcoin, the percentage daily return of Bitcoin is in the dotted line in yellow. And the cumulative profit and loss for iBit is in blue. And we can see that everything was good for iBit in basically right up until February this year. So we can see that there were a ton of inflows in the very beginning for iBit. when the price of Bitcoin was preparing for its big major leg up throughout the end of 2024, leading into the election seaters that elected Donald Trump for his second term. So lots of accumulation while Bitcoin was preparing to ramp up its price action. And then even more accumulation as we can see the net flows are in green and red here.

So there's a lot of accumulation leading up to Bitcoin's massive ball run throughout 2024 and 2025. At the peak of that bull run, Ibit was actually about $30 billion in profit overall. So collectively altogether, BlackRock ETF through Ibit, Ibit shareholders were way up on their Bitcoin bought to date. But there wasn't a lot of outflows when, I mean, comparatively to the inflows, most shareholders chose to hold their Bitcoin through the ETF wrapper. after Bitcoin posted its all-time high, which means that they didn't essentially take profit overall. There was quite some outflows, but compared to the total sum of the cumulative inflows, most people did not decide to take profits when Bitcoin was at its all-time high. And in fact, many bought the top.

What that has converted to is that now BlackRock's ETF is now significantly underwater. The average cost of its Bitcoin, and these aren't exact numbers because it's very difficult to know exactly how much iBit acquired the Bitcoin owed to its shareholders. We don't know what price that happened at, but we do know the roundabout price of what Bitcoin was worth on that day compared to its net flows. But the average cost of iBIT's Bitcoin is around 79,500. And we know now that Bitcoin is significantly under that as a trading around $62,000. So what that means is that iBIT is underwater the effort.

It's for $13 billion right now, which is quite some billions, I do have to say. And I'm going to switch now to Fidelity's version of the chart. And you see that Fidelity is not quite as so much underwater because its average cost is actually significantly lower than iBits at around $55,000 or 55350. And you might wonder why. And you can see here, I'm going to switch between them. You can see here that for Fidelity, Fidelity shareholders actually took quite some profits during December 2024. And continue to take, you know, the balance between net inflows and net outflows stayed pretty much even throughout the tail end of Bitcoin's massive price action towards the end of last year.

So there was a lot of profit taking for Fidelity shareholders. If we go back to the iBit chart, you can see that there's way more inflows than outflows throughout Bitcoin's massive rally to all-time highs around October last year. So what that means is that it's effectively brought down the average cost of the current holdings of FBTC. But still FBTC is also in the red, down for about $1.5 billion. dollars. And at its peak, Fidelity was actually up 14 billion. So this would give you some indication of perhaps the psychology of Bitcoin ETF holders going into the, I'm going to say,

the rest of the first quarter or first third of the current Bitcoin bear markets. If I was to pin the tail on the bear, I would say that's about where we are, which means that if your average ETF holder is currently underwater, especially for those in Ibit and Fidelity and some others,

if Bitcoin drops any more from here, and we don't see a lot of ETF holders actually cut their losses and capitulate, and we could see basically every Bitcoin ETF overall be underwater on its inflows. If they don't do that,

then I believe, that I have to imagine that your average ETF shareholder is going to feel a lot of pressure to perhaps capitulate themselves going into the next few months. So we could see, if that happens, we could see outflows accelerate from a lot of these ETF funds, which of course might not be any fun at all. But as we know from an episode a week or two ago when I looked at when the Bitcoin bear market might end, we know that the final phase of bear markets is usually a big capitulation downwards. And then we see a slow accumulation consolidation into the next ball market. So let's just have a look at what the ETH ETFs look like.

And as grim as it is, every single ETH ETF is underwater on their on their flows. So the price of ETH as a percentage of its daily returns since the launch of the first spot ETS. That is in the dotted line in purple here. And we can see again, because BlackRock's ETFs are by far the beat us, we can see that those are also the ones with significantly the most pain. We can see that BlackRock's ETHA ETF is very deeply in the red. Overall, its shareholders currently, the remaining shareholders that it does have, or the current shareholders, I should say, close to 60% down on its net flows,

which is rather brutal. But the next closest one is about 18% down, which I believe is Fidelity, F-Eath. And then there is F-B, which is also down somewhat. The others are pretty much close to breaking even or at least just underwater. But those are probably just a function of just a much smaller shareholder cohort for those EATs. And so here I've zoomed into ETHA, which is BlackRock's ETH ETF. And you see that it's $6.4 billion. underwater on its flows.

The average cost of the ETH currently held by ETHA is actually 3,900. Right now the price of ETH is about 1600. So brutal, it's a little bit brutal for ETH ETF holders. Overall, they're significantly underwater on their investments to date. And of course, there's likely individual shareholders of ETHA that are ahead. But again, as a fund is just treating the fund as one single entity, it is not performing that great. And again, why is it that ETHA is so underwater on the ETH that is accumulated to date? And again, most of the inflows, you can see on my screen, most of the inflows came when ETH was rallying very hard alongside Bitcoin in mid-20205.

And not a lot of profit taking happened. There was some. You see some profit taking. You see the red spikes of outflows as ETH began to came down. But what would be better if those outflows happened when the price of ETH was at its peak? That's when ETH A shareholders should have sold, taken profits. And that would have meant that ETHA would technically be, maybe it would be closer to breaking even, but at least it wouldn't be $6.4 billion in the red.

So this might give insight into, again, the psychology of ETF holders because we know that ETF holders are playing a much more significant role in the market. I would say that between ETF holders and digital asset treasury companies like strategy and some other big ones, I mean, also there's like forward industries for Solana. There's also sharpling for ether. So between ETFs, digital asset treasury companies, these entities or these groups of holders are playing just about a significant role, if not even more significant role, than minors, validators and so on did in previous cycles.

So if we are going to watch one cohort for the next six months, it is effectively ETF holders. And I would hate to think what the psychology of the market is going to be once. it does get to a point that Bitcoin ETF holders do decide to capitulate, cut their losses and maybe jump into AI stocks or whatever it is at their own peril, I would say at that point in time. But okay, I mean, so, I mean, it's not the most bullish chart, but I just do find it quite interesting that we can pick apart which funds might have been better at picking at buying the dips, selling the top,

that sort of thing. And so far, it doesn't seem that at least the ETFs for the big, at least the bigger ETFs, overall their shareholders have not done a great job at time in the market. I will say that. They did in the beginning, because of course the ETFs were way ahead as Bitcoin was climbing up. But I think this appears to be a lesson in.

You should probably take profits and try and sell the top whenever it is. I mean, and it's very difficult because there were so many people at the top saying that this cycle is different. There's no such thing in cycles anymore. It's going to go up forever because we do have ETFs powering the price and we do have the Bitcoin president and so on. We had so many people saying this stuff so I can understand that your average person who doesn't want to hold crypto directly, not even in a crypto exchange.

They'd rather just buy an ETF through a brokerage. Perhaps they were getting some of the, a little bit too much of, of the hype around that time, which would probably explain it. But again, I guess this is just the realities of investing in volatile assets at their peak. So perhaps take this as a warning for AI stocks moving forward that if you are in a position to take profits at any time, I would encourage you to do that. Okay, on to the next one. Okay, so I just want to plug Digital Assets Summit 2026 Asia, where it's happening on October 7, 2026 at the Marina Bay, Sands, Singapore. This is a high signal single day institutional summit alongside token 2049. So if you're in the,

if you're in town for token 2049, this will be happening effectively in the same building. So the event is going to cover stable coins and global payments, fintech and enterprise innovation, defy and risk management, global digital asset policy, ROWA is an on-chain institutional finance and alongside a ton of other topics. I hear that tickets are definitely going to sell out. So early access rates are now available and standard rates will set in later in the summer. So again, if you're in Asia, if you're in Singapore, if you're attending token 2049, you don't want to miss out on the Digital Assets Summer Asia Edition. So a real focus on the institutional philosophy, the institutional vibe, the institutional zeitgeist when it comes to crypto, when it comes to crypto and

blockchain rails in 2026 and beyond. So please do go and check it out on the Blockworks website. There's also Digital Assets Summit, London, which is happening on November 10 and 11th. So the month after Das Asia at the Hilton Park Lane. So if you can't make Asia and you're in Europe instead, please go and check out Digital Asset Summit 2026. And again, tickets are definitely going to sell out. Das London is the best institutional event for the UK and Europe all year. So if you're US-pilled, if you're only state side, if you're only conceptualizing what the

future of crypto looks like, under the Genius Act, under the Clarity Act and so on, there's a whole wide world out there of crypto outside the US and where all the key decision makers come together is Blockworks Das London. So please go and check it out. Check it on the Blockworks website. Check out the tickets. Make sure you did the early bird prices because the prices are just going to ratchet up as scarcity increases and supply of tickets goes low before they sell out.

So please go and check it out. More than likely you're going to see me in London. So I'm going to be plugging this often as we get closer to the event. And if you're in London, please do come and say hello in amongst the event. All right, on to the next one. Okay, so we're going to quickly chat about SpaceX pre-IPO perps because, yeah, I mean, this is all happening this week. It's all going to come to a head.

But the SpaceX IPO is a little bit different in that it has a set price going into it. At least the initial share sales. So SpaceX is offering, I'm reading from CNBC, SpaceX is offering a take-your-leaver price of $135 rather than providing a range and then pricing the deal based on demand, as is usual, as is usual for IPOs. So the price is set at 135 in the beginning, and then after a few days, once it really goes live for training, then we're going to see some price discovery happen after that.

So what does that mean for pre-IPO stocks on hyperliquid? And we can see that right now, I mean, they have the mark price up here, at least on the Jupiter terminal set at 154, so I think this actually needs to be updated a little bit. I mean, right now, the price of the space X pre-IPO is trading at 138. So it makes sense that the price is normalized around what the price SpaceX has set itself for for the IPO. But what I find interesting is that the whole function of these pre-IPO perps is to, there's a couple of things that it does. It gauges investor interest leading into the IPO. So if traders are anticipating that as soon as the share price hits actual exchanges and live trading,

then if they're expecting the price to shoot up from there, then maybe we might see the SpaceX pre-IPO IPO perp trend upwards towards that point as people try and pile in to gain an edge on that initial price. But also just gives us a window into how many people, how many people in crypto actually want to get. pre-IPO exposure to these sales. And I mean, there's a lot going on with this because I don't believe that the SpaceX IPO is actually going to give a real reflection of what the investor interest could be for future IPOs because SpaceX is really pushing to give retail investors

a much bigger chunk of the total float going into the IPO. Usually retail is a lot at about 5 or 10% of the IPO, but SpaceSach is pushing to have that number increased to around 20 or 35% of shares to go to retail. So if you have a situation where retail can gain price exposure to an IPO, they just might have to wait a few days, then you probably have a lot of retail investors waiting for that point in time, rather than having to figure out how to use crypto, figure out how to use hyper liquid. Can they even use hyper liquid in their region and all this and all this sort of stuff? So we might not be seeing a true honest reflection of the power of crypto rails to actually change the fundamental dynamics of the IPO market yet. We might have to wait for another IPO in the

future where the sale is again, as is as is customary, skewed towards investment banks, and so on, so that the retail allocation is much smaller, to actually see, do crypto rails actually have an outsized representation in terms of volume and holders and all that sort of stuff? So all that aside, what can we read right now from at least the SpaceX market? Well, I mean, right now the market cap of the SpaceX pre-stock is $6 million. So that is not the biggest, biggest number. There's 11,000 holders of the SpaceX pre-IPO token. So again, it's about the size of your average air drop, I would say, going back a year or so

when air drops were all the rage. So relatively small, trading about on par with what the SpaceX IPO price is set to. Let's zoom out from there, though. So on the Blockworks Research Portal, we have the pre-stocks tab, the pre-stocks analytics tab. And we can see now the collective supply of pre-stocks out there. And if we set to percentage, I mean, it's the biggest, the bitest is still anthropic, actually. It seems most, that has gained the most market cap compared to the others.

With SpaceX having about 28% of the total market cap of pre-stocks, anthropic is about 38%. Open AI is only 12%. But I would anticipate those things to change over time, especially Open AI. I mean, we think that Open AI is going to go public later in the year. So, I mean, this is subject to change as we get closer to that date. But the total market cap overall of pre-stocks is only $22 million. So very niche market within crypto, pre-IPO stocks, I will say that. What else have we got on here?

I mean, it's worth looking at how the top. total holders has changed over time. And that's quite illuminating, I will say. I mean, they haven't been around the longest time. But what we're looking at, this data goes back to when they first launched, I guess, in September 2025. We do see a lot of people piling in to SpaceX over the past few weeks. So let's see. A month ago on May 10th, there was 6.6,000 holders of SpaceX. Today, were at over 11,000. So we've seen the number of holders participating in this market about double in the past month as we head into the SpaceX IPO.

So that's quite bullish. That's a big increase. But again, 11,000 addresses is not the, and a total market count of 22 million. This isn't exactly something to write home about. But again, I would just say that this is essentially what I would characterize these markets at in their current form is proof of concept. This is a proof of concept that these markets can function. These markets can price things somewhat appropriately leading into the actual IPO. And of course, I mean, these are just cash settled. These are just cash settled.

So you don't actually get stocks at the end of the day. It is just a way to gain price exposure on the IPO ahead of time. But I just wonder, I just perhaps SpaceX, their push to give a higher allocation to retail investors might also inspire the other AI companies that are set to go public like Anthropic and Open Eye. Perhaps they will do the same thing. I'm not too sure. But if they do, that would somewhat take the edge off

of what these crypto rails are meant to provide. And just on a fundamental level, if we are trying to characterize pre-IPO perps as a way for retail investors to finally, like the IPOs to be democratized and the early exposure truly be democratized, then you would want to see a lot of retail participation in those markets. But right now, it's happening on quite a small scale. But seeing the growth in holders, particularly over the past month for SpaceX,

that's quite encouraging to me. If we got to the point where there would say 50,000 holders of these pre-IPO stocks, then I would say, hey, this is actually a material market that is going to make a huge difference. And we are at least trending towards that way. So about one fifth of the way there to having a truly healthy and deep liquid market for at least the biggest one, which is SpaceX. So the next one I would say is going to be Anthropic. So we would hope to see Anthropic even beat SpaceX.

Again, especially if Anthropic skews its IPO dynamics. towards investment banks and away from giving retail a true chance at getting as much price exposure early on as they can. But in any case, this is about what I'm looking at for today. I hope you enjoyed. As always, smash like and subscribe. Share it with people. Tweet about it. Tweet at me at Deacon Ellis. Write me an email, David at blockworth.com. Leave a comment on Spotify. Wherever you're consuming this, just reach out to us and let us know that you're listening. and maybe tell me something that you want me to chat about in the future and I'll do my best. All right, take care of yourselves.

We'll see you next time.