Investors pulled a staggering $938 million from U.S. spot Bitcoin ETFs in a single day, marking the largest daily outflow ever for these funds. Recently, the Bitcoin market has been shaky, struggling to hold above $90,000. This has naturally led to an exodus extending over six consecutive days, culminating in a total of over $2.4 billion exiting these funds this month alone. “This month has been brutal for Bitcoin enthusiasts,” commented Nate Geraci, President of ETF Store, on X. He expressed his astonishment at the traditional finance sector’s apparent distaste for cryptocurrency.
Investors Retreat from Bitcoin ETFs
The massive outflows were led by the Fidelity Wise Origin Bitcoin Fund (FBTC), which alone saw $344.7 million walk out the door. BlackRock’s iShares Bitcoin Trust (IBIT) followed with $164.4 million in withdrawals. These significant redemptions signal a cooling interest among institutional investors. Now, they compare the returns from Bitcoin ETFs unfavorably with safer assets like U.S. Treasury notes. According to Velo Data, the appeal of cash and carry arbitrage has diminished as the annualized one-month basis in CME Bitcoin futures dropped significantly.
Strategies Shift as Premiums Tumble
The decline in the premium of CME-listed Bitcoin futures has directly impacted the profitability of carry trades, once a favored strategy by hedge funds. These funds involved buying spot ETFs and simultaneously selling futures to hedge against market movements and capture the premium difference. As of Tuesday, this premium dropped to a mere 4%, a stark decrease from the nearly 15% observed in December. “It’s a harsh reality check for crypto traders,” noted Markus Thielen, head of research at 10x Research.
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