Bitcoin ETFs See Record $938M Outflow as Arbitrage Profits Diminish
U.S. spot bitcoin ETFs witnessed an unprecedented wave of outflows on Tuesday as weakening futures premiums reduced the appeal of a once-lucrative arbitrage strategy.
Bitcoin (BTC) dropped below $87,000, hitting a three-month low and dragging the broader crypto market down. Simultaneously, investors pulled a record $937.78 million from spot bitcoin ETFs—the largest single-day outflow since their launch in January 2024, according to SoSoValue.
Fidelity’s FBTC bore the brunt of the withdrawals, losing $344.65 million, followed by BlackRock’s IBIT with $164.37 million in redemptions. Other ETFs also faced outflows but remained under the $100 million threshold.
A major factor behind this mass exodus is the declining premium in CME bitcoin futures, which has made the once-popular “cash and carry” trade far less profitable. This strategy, favored by institutions, involves buying bitcoin ETFs while shorting CME futures to capture a risk-free yield. However, with the U.S. 10-year Treasury yield hovering at 4.32%, the appeal of this trade has significantly diminished.
Velo Data shows that the annualized one-month basis for CME bitcoin futures has fallen to 4%—its lowest level in nearly two years—after peaking at 15% in December. Ether futures have also seen a sharp drop in basis, hovering around 5%, leading to $50 million in outflows from spot ether ETFs.
With carry trade yields dwindling, institutional investors may continue to rotate funds away from crypto ETFs, potentially prolonging the current market weakness.
