Recent analysis revealed that about 56% of Bitcoin ETF inflows are associated with short-term strategies like arbitrage.
Investor Strategies in Bitcoin ETF
Since their launch in January 2024, Bitcoin ETFs have attracted approximately $39 billion in net inflows. However, Markus Thielen, head of Research at 10x Research, estimates that only $17.5 billion—about 44%—constitutes genuine long-term holdings. The remaining 56% of inflows are primarily linked to arbitrage strategies like the 'carry trade,' where investors purchase Bitcoin through ETFs while shorting futures to profit from price discrepancies.
Key Market Participants
Much of the activity in Bitcoin ETFs is driven by funding rates and short-term trading opportunities. Hedge funds and trading firms, the largest holders of BlackRock's IBIT ETF, focus on capturing market inefficiencies for profit rather than making directional bets on Bitcoin's price movement.
Changes in Investor Sentiment
Recent buying behavior shows some changes; Thielen observed an increase in long-only Bitcoin purchases after the U.S. presidential election, indicating a rise in genuine long-term demand. Despite this, declining retail trading volumes have led to collapsing funding rates, reshaping the ETF market landscape.
The influence on the cryptocurrency market, including Bitcoin, continues, shaped by broader market conditions, particularly the Federal Reserve's hawkish stance. Analyst Thielen anticipates continued consolidation in Bitcoin and other cryptocurrencies due to these factors.
