The post U.S. Bitcoin ETFs Post Year’s 2nd-Biggest Outflows, More May Be on the Way appeared on BitcoinEthereumNews.com.

U.S. spot-listed bitcoin (BTC) exchange-traded funds (ETFs) experienced the second-biggest outflows of the year on Monday, dropping $516.4 million, Farside data shows. The withdrawals, the ninth net outflow in 10 days, reflect a growing discomfort with the largest cryptocurrency, which has traded in a narrow price range between $94,000 and $100,000 for most of this month. On Tuesday, bitcoin broke out of its three-month channel, falling below $90,000 and sliding to as low as $88,250. According to Velo data, the bitcoin CME annualized basis — the difference between the spot price and futures — has dropped to 4%. This is the lowest since the ETFs started trading in January 2024. This is also known as the cash-and-carry trade, which is a market-neutral strategy that seeks to profit from the mispricing between the two markets. The strategy involves taking a long position in the spot market and a short position in the futures market. Velo data shows a one-month futures forward contract. Investors collect a premium between the spread of the spot and futures pricing until the futures contract expiry date closes. At the current level, the basis trade is less than the so-called risk-free rate, the yield on the U.S. 10-year Treasury of 5%. The difference may persuade investors to close their positions in favor of the greater return. That could see further outflows from the ETFs. Because this is a neutral strategy, investors will also have to close their short position in the futures market. Arthur Hayes, the co-founder of Bitmex, alludes to the basis trade unravelling in a post on X. “Lots of IBIT holders are hedge funds that went long ETF short CME future to earn a yield greater than where they fund, short term US treasuries,” he wrote. “If that basis drops as bitcoin falls, then…

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Filed under: News - @ February 25, 2025 11:18 am