Spot Bitcoin exchange-traded funds (ETFs) in the US have recorded their most significant single-day outflows since their launch in January 2024.
Farside data shows investors pulled a combined $937.7 million from these funds on Feb. 25.
This sharp sell-off surpassed the previous record of over $671 million in December. It also continued a trend that has seen the financial products record over $2 billion in outflows during the last six trading days.
On Feb. 25, Fidelity’s FBTC saw the largest redemptions, with $344.7 million pulled from the fund, while BlackRock’s IBIT followed closely with $164.4 million in outflows.
Bitwise’s BITB lost $88.3 million, and Grayscale’s Mini Bitcoin Trust saw $85.8 million withdrawn. Franklin Templeton’s EZBC recorded $74.1 million in redemptions, while Grayscale’s GBTC experienced a $66.1 million outflow.
Additionally, Invesco Galaxy’s BTCO followed with $62 million, and Valkyrie’s BRRR saw a $25 million exit. WisdomTree’s BTCW lost $17.3 million, and VanEck’s HODL faced a $10 million outflow.
Why Bitcoin ETFs outflows?
Daniel Kostecki, an analyst at CMC Markets Poland, attributed the withdrawals to the breakdown of a popular arbitrage strategy known as the basis trade.
The strategy involves profiting from price differences between Bitcoin’s spot market and futures contracts. Traders typically buy Bitcoin ETFs while simultaneously shorting futures contracts on exchanges like CME.
This trade works when futures prices exceed spot prices, allowing investors to capture the difference when prices converge at contract expiration. However, if futures premiums shrink, traders face losses and may be forced to exit their positions.
BitMEX co-founder Arthur Hayes pointed out that institutional players using this strategy might now be unwinding their trades, triggering the massive ETF outflows in recent days.
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