A substantial portion of the influx into spot Bitcoin exchange-traded funds (ETFs) may originate from arbitrage trading, as suggested by Real Vision CEO Raoul Pal. This revelation underscores the prevalent role of arbitrageurs in influencing ETF flows, with retail investors playing a minor role in driving market dynamics. Pal's assertion stems from insights gleaned from data presented by crypto analyst Tom Dunleavy and MV Capital partner Tom Dunleavy, revealing that the primary holders of United States Bitcoin ETFs are hedge funds sourced from a diverse range of institutional and individual investors. Collectively, these top 80 firms manage approximately $10.26 billion in spot Bitcoin ETF shares, representing around two-thirds of the total $15.42 billion in net inflows since the inception of spot Bitcoin ETFs on Jan. 11. Notably, the largest stakeholder, international hedge fund Millennium Management, holds $1.94 billion in Bitcoin ETF shares and recently diversified its holdings across various issuers including Bitwise, Grayscale, Fidelity, BlackRock, ARK, and 21Shares' ETFs. Despite Pal's emphasis on arbitrage flows, some critics have contested this view, highlighting that excluding the Grayscale Bitcoin Trust, the combined assets under management of the ten U.S. Bitcoin ETFs and short interest on the CME surpass $42 billion. According to crypto trader Joseph B., while recent inflows may be driven by basis trading, the overall basis trade accounts for less than 15% of total ETF flows. Pal justified his position by noting that flows from these firms predominantly engage in arbitrage, mirroring the risk-oriented approach of major hedge funds that prioritize risk management over directional trading strategies based on Bitcoin price forecasts. Arbitrage trading in Bitcoin ETFs involves capitalizing on short-term opportunities by exploiting variances between the ETF's net asset value (NAV) and Bitcoin's market price. The prevalent trading behavior among top holders indicates a preference for active trading rather than a traditional 'Buy and Hold' strategy, as highlighted by Deep Q Digital CEO Carlos Zendejas.