Bitcoin ETFs Pull in $3B While CME Futures Open Interest Drops, Highlighting Market Shift
The Bitcoin market is seeing a distinct change in investor behavior, with U.S.-listed spot Bitcoin ETFs pulling in over $3 billion in net inflows since November 20. Simultaneously, CME Bitcoin futures open interest has fallen sharply, signaling a potential shift toward ETFs for direct bullish exposure.
According to Farside Investors, Bitcoin ETFs have seen consistent daily inflows, excluding November 25 and 26. On Tuesday, BlackRock’s IBIT ETF recorded its largest inflow of $693.3 million, bringing its lifetime total to $32.8 billion. Meanwhile, CME futures open interest decreased by nearly 30,000 BTC (equivalent to $3 billion), down to 185,485 BTC, based on Glassnode data.
This divergence marks a departure from historical patterns, where ETF inflows and CME futures open interest typically moved in tandem, driven by the cash-and-carry strategy. This popular arbitrage method involves going long on ETFs while shorting CME futures to earn the futures premium, allowing investors to avoid price risk. However, the current trend suggests ETFs are increasingly being used for outright directional bets on Bitcoin.
Arbitrage Still Delivers Strong Returns
Despite the rising preference for direct ETF exposure, the cash-and-carry trade remains an attractive option. CME’s three-month Bitcoin futures basis currently offers an annualized yield of 16%, significantly higher than returns on U.S. 10-year Treasury bonds or Ethereum staking.
While the cash-and-carry yield peaked above 20% earlier in 2023, Bitcoin’s strong rally—up more than 100% this year—has driven greater interest in holding the cryptocurrency directly. ETFs, as a simplified and regulated avenue for gaining exposure to Bitcoin’s price movements, have seen surging demand.
This growing shift toward ETFs indicates evolving market dynamics, with investors moving beyond arbitrage strategies to capitalize on Bitcoin’s upward trajectory through straightforward and accessible financial products.
