Key Takeaways
- Spot Bitcoin ETFs faced $1.13 billion outflows in seven consecutive days.
- Multi-strategy hedge funds are unwinding their Bitcoin ETF and CME futures positions.
- Some institutional investors, like MicroStrategy, remain bullish despite the outflows.
In the past seven trading days, spot Bitcoin (BTC) exchange-traded funds (ETFs) have witnessed significant outflows amounting to $1.13 billion. This development has raised concerns among investors and traders about Bitcoin’s stability and future trajectory.
Behind the Spot Bitcoin ETF Outflows: Shifts in Market Sentiment and Dynamics
According to SoSo Value data, these outflows were recorded from June 13 to June 24. The Grayscale Bitcoin Trust (GBTC) and Fidelity Wise Origin Bitcoin Fund (FBTC) were the biggest contributors to these significant outflows, with $90 million and $35 million outflows, respectively, as of June 24.
The crypto research firm 10x Research highlights that this selling trend contrasts sharply with the bullish buying in February and March, driven by perceived institutional adoption of Bitcoin. The current bearish sentiment reflects ETF selling as institutions potentially exit the market, significantly impacting market confidence and trading behaviors.
Hedge Funds and Bitcoin Futures
Multi-strategy hedge funds, previously long on Bitcoin ETFs and short on Chicago Mercantile Exchange (CME) Bitcoin futures, are now unwinding their positions. This decision, driven by an annualized funding rate below 10%, is reflected in the decline of open interest in Bitcoin CME futures, matching the volume of sold Bitcoin spot ETFs.
Arbitrage and Delta-Neutral Strategies
Arbitrage funds, which constitute 30-40% of the $14.2 billion Bitcoin ETF inflows, have traditionally leveraged a delta-neutral strategy by buying spot Bitcoin and selling futures. Current market conditions have prompted a reassessment of this strategy, reflecting a broader shift in institutional behavior and market sentiment.
Bitcoin ETF Buyers and Market Impact
Concerns are growing about the over-bullish sentiment regarding spot Ethereum ETFs amid weak Bitcoin ETF inflows. The average Bitcoin ETF buyer is now flat, with an average entry price of $60,000-$61,000. Continuous ETF outflows coincided with Bitcoin’s price drop from $64,076 to $59,495 on June 24.
Markus Thielen from 10x Research noted:
Hypothetically, this adds up to $16-18 billion, similar to the year-to-date Bitcoin ETF inflows.
Despite significant outflows, some institutional investors remain bullish. Companies like MicroStrategy and Japanese firm Metaplanet announced substantial Bitcoin purchases, and spot Bitcoin ETFs in Hong Kong increased their Bitcoin holdings from 3,842 BTC on June 21 to 3,911 BTC on June 24.
