Bitcoin ETF Analysis: Over Half of Investments Linked to Arbitrage

user avatar

by Giorgi Kostiuk

2 years ago

Since the launch of Bitcoin ETFs in the US in January 2024, there has been significant interest in these financial products, with most investments linked to short-term arbitrage strategies.

Arbitrage Strategies Dominate Bitcoin ETF Inflows

According to 10x Research, only 44% of the $38.6 billion invested in Bitcoin ETFs are real long-term investments. The remaining 56% is associated with arbitrage strategies, particularly the carry trade, where traders buy Bitcoin through ETFs and sell futures. This allows them to profit from the price difference between spot and futures markets.

Declining Arbitrage Appeal Triggers Outflows

The narrowing of funding rates and basis spreads has made arbitrage less appealing, leading to reduced inflows into Bitcoin ETFs and significant outflows recorded in the past month. Despite this, the spot price of Bitcoin has remained stable.

Changing Market Dynamics Post-Election

Following the US elections, there has been an increase in genuine Bitcoin buying activity. However, plummeting funding rates and declining retail trading volumes continue to challenge the market. Meanwhile, interest from traditional financial institutions in Bitcoin ETFs remains evident.

Research indicates that despite the large volume of Bitcoin ETFs, the share of long-term investments is limited, highlighting the significance of arbitrage strategies in the current market.

Tier I

Sector: #18291

Sealed Hiding Place Room

Resource Cache

Resource Cache

Tier I

Requires 25% Tier Progress to Claim
Meme Cache

Meme Cache

Tier I

Requires 50% Tier Progress to Claim
Equipment Cache

Equipment Cache

Tier I

Requires 75% Tier Progress to Claim

After collecting, hiding places will be stored in your inventory and can be opened with Keys.

Other news

Proposed Lending System Could Transform XRP Ledger

The proposed lending system aims to introduce new financial capabilities directly into the XRP Ledger.

user avatarMaria Fernandez

Next Steps for XRP Ledger's Lending Amendments

The next milestone for the XRP Ledger is securing the remaining validator votes for the lending amendments.

user avatarKenji Takahashi

XRP Ledger Moves Closer to Native Lending Capabilities

The XRP Ledger is nearing the introduction of a lending protocol, with increasing validator support.

user avatarGustavo Mendoza

BotPsy Sets New Standards in AI Performance Benchmarks

Tether's QVAC BotPsy has achieved impressive scores in AI performance benchmarks, scoring 440 on BFCL v4 and 587 on ACEBench, surpassing larger models and demonstrating the potential of smaller AI models.

user avatarMiguel Rodriguez

Tether Launches Innovative AI Model QVAC BotPsy

Tether introduces QVAC BotPsy, an AI model with 800 million parameters that excels in performing everyday tasks on personal devices.

user avatarRajesh Kumar

CoreWeave's Strong Q3 Performance Boosts AI Sector Sentiment

CoreWeave's strong Q3 results have increased investor sentiment in the AI sector, reporting $366 million in revenue, a 168% year-over-year increase, and raised full-year guidance.

user avatarLuis Flores

Important disclaimer: The information presented on the Dapp.Expert portal is intended solely for informational purposes and does not constitute an investment recommendation or a guide to action in the field of cryptocurrencies. The Dapp.Expert team is not responsible for any potential losses or missed profits associated with the use of materials published on the site. Before making investment decisions in cryptocurrencies, we recommend consulting a qualified financial advisor.