According to an industry expert Peter Chung, these outflows may have been caused by the unwinding of basis trades by institutional investors.
By Mayowa Adebajo
Edited by Julia Sakovich
Updated
3 mins read
On Tuesday, February 25, US spot Bitcoin exchange-traded funds (ETFs) saw their biggest yet net outflows in a single day. Excluding data from Ark Invest’s ARKB, the funds registered outflows of $1.01 billion on the day. That is, with 10 out of the 12 funds seeing more capital withdrawn from them than entered.
SoSoValue data shows that Fidelity’s FBTC was the largest hit of all the spot Bitcoin funds. It lost $344.65 million in capital and was followed by BlackRock’s IBIT, which also saw $164.3 million in outflows.
About $100 million left Valkyrie’s BRRR, while other funds also lost substantial amounts. For example, Bitwise’s BITB and Grayscale‘s Mini Bitcoin Trust logged outflows of $88.3 million and $85 million , respectively.
The rest of the funds saw modest but yet noticeable outflows to wrap up a day that went down as a record-breaking day for spot BTC ETFs outflows.
Speaking about outflows records, the previous one happened on December 19, when these funds saw cumulative withdrawals of $671.9 million. At the time, Bitcoin’s price BTC $84 308 24h volatility: 3.5% Market cap: $1.67 T Vol. 24h: $33.01 B had just corrected from its then-peak of around $108,000.
According to an industry expert, Peter Chung, these outflows may have been caused by the unwinding of basis trades by institutional investors.
Chung, who is the head of research at Presto Research, explained that the strategy involves buying Bitcoin ETFs while shorting CME futures to capitalize on yield differences. However, being that the yield discrepancies have narrowed — notably from about 10% to 5%, Chung believes that hedge funds may have started liquidating their positions. This, according to him, must have triggered the ETF outflows.
Supporting this perspective is a recent CoinDesk report that quotes Velo data as saying that the Bitcoin CME annualized basis has declined to 4%. For what it’s worth, this is the lowest point since the ETFs were launched in January 2024, and this reduced premium may just have made the basis trade less attractive for institutional investors.
The ETF outflows coincided with Bitcoin’s price dipping below the $90,000 mark. Bitcoin dipped as low as $88,000 on Tuesday, and some analysts have attributed its steep fall to a number of macroeconomic factors.
According to a recent post by The Times, President Trump’s announcement of a 25% tariff on imports from Canada and Mexico has somehow heightened inflationary fears, causing more volatility in the market.
Furthermore, Bybit exchange recently suffered a major hack that led to the loss of over $1.5 billion in Ether. All of these appear to have taken a toll on investor confidence in the crypto sector.
As of publication, Bitcoin was trading at $88,821, down 0.32% in the past 24 hours, according to Coinspeaker’s Bitcoin price page.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Mayowa is a crypto enthusiast/writer whose conversational character is quite evident in his style of writing. He strongly believes in the potential of digital assets and takes every opportunity to reiterate this. He's a reader, a researcher, an astute speaker, and also a budding entrepreneur. Away from crypto however, Mayowa's fancied distractions include soccer or discussing world politics.
