BitMEX co-founder Arthur Hayes has predicted a drop in Bitcoin's price below $70,000 if large hedge funds exit Bitcoin ETFs.
Impact of Hedge Funds on BitMEX
According to Hayes, many investors in the iShares Bitcoin Trust (IBIT) are hedge funds who have operated on a low-risk basis by outperforming short-term US Treasury yields.
Arbitrage Strategies and the Bitcoin ETF Market
Hayes suggests that a significant portion of the demand for Bitcoin ETFs comes from hedge funds engaged in arbitrage activities, such as 'basis trading', where the price difference between the ETF and CME futures is used for profit.
Massive Withdrawal and Market Reaction
Massive withdrawals from US exchange-traded funds have begun, leading to a decline in Bitcoin prices. The worst outflow in seven weeks occurred on February 24th, with $517 million leaving 11 bitcoin ETFs.
The situation in the bitcoin ETF market highlights the significance of arbitrage strategies by hedge funds and their impact on Bitcoin prices.
