Record Outflow of Over $930M from U.S. Bitcoin ETFs as Carry Trades Decline
Investors withdrew substantial funds from Bitcoin and Ether spot ETFs on Tuesday as diminishing appeal in carry trades linked to CME futures became apparent.
- The market downturn saw Bitcoin (BTC) drop to a three-month low below $87,000, affecting the overall cryptocurrency market.
- A total net outflow of $937.78 million was registered from U.S.-listed spot Bitcoin ETFs, marking the largest single-day redemption since their launch in January 2024, as per data from SoSoValue.
Tuesday was a challenging day for cryptocurrency, leading to unprecedented investment withdrawal from these ETFs.
The leading fund, Fidelity’s FBTC, faced a major outflow of $344.65 million, while BlackRock’s IBIT experienced $164.37 million in redemptions, both displaying heightened investor hesitance.
Factors contributing to the declining demand for these ETFs include a drop in the CME-listed Bitcoin futures’ premium, which has significantly impacted the attractiveness of cash and carry strategies. Currently, these trades are barely yielding more than the U.S. 10-year Treasury note yields, which have recently reached 4.32%.
This cash and carry strategy, preferred by institutional investors since early last year, involves purchasing the spot ETFs while concurrently selling the CME futures to earn returns without exposure to price risk.
Data from Velo Data indicated that the annualized one-month basis in the CME Bitcoin futures plummeted to 4% on Tuesday—the lowest in almost two years and a sharp decline from nearly 15% in December. Ether futures have similarly seen a decline, with Ether spot ETFs in the U.S. also experiencing a combined outflow of $50 million on Tuesday.
