The post Bitcoin ETFs and the Hidden Dynamics of Spot Demand appeared on BitcoinEthereumNews.com.

Bitcoin Concerns are mounting inside the crypto market over whether large ETF market makers are quietly capping Bitcoin’s upside. Key Takeaways The issue is structural, not about one firm suppressing Bitcoin. ETF market makers can hedge with futures instead of buying spot BTC. That reduces automatic spot demand from ETF flows. In-kind redemptions further weaken forced spot buying. No clear manipulation – but the ETF design may influence price discovery. The debate intensified after a widely shared analysis argued that the issue is not about a single firm, but about how the Bitcoin ETF system itself is built. At the center of the discussion is the structure governing Authorized Participants (APs) – the institutions that create and redeem shares for spot Bitcoin ETFs. These firms include major global trading houses and banks that act as the plumbing behind ETF liquidity. While some traders have questioned whether one specific firm is suppressing Bitcoin’s price, the broader argument suggests the mechanics of the ETF framework may be having unintended side effects. The ETF Structure Behind the Debate Under U.S. market rules, APs operate within a special regulatory carve-out that allows them to facilitate ETF creation and redemption efficiently. In practice, this gives them flexibility to manage exposure without being subject to the same constraints that ordinary short sellers face. When a spot Bitcoin ETF trades below its net asset value, the textbook expectation is that arbitrage forces close the gap. An AP can redeem ETF shares for Bitcoin and profit from the price difference. However, critics argue that in reality, that arbitrage does not always require buying Bitcoin in the spot market. Instead, exposure can be hedged using futures contracts or other correlated instruments. If an AP offsets short ETF exposure with Bitcoin futures rather than purchasing spot BTC, the natural buying…

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Filed under: News - @ February 26, 2026 1:26 pm