A study from 10x research suggests that only 44% of Bitcoin ETF inflows are for long-term investment. Let’s break it down.
Most traders play short-term strategies like arbitrage. Let’s look into what Bitcoin ETF is all about.
Bitcoin ETFs: $39B Inflows, But Only $17.5B Stays Long-Term
When U.S. markets introduced Bitcoin ETFs in January 2024, investors poured in $39 billion. According to this research, only $17.5 billion was a consistent long-term investment. Bitcoin ETF holdings use the “carry trade” strategy for their 56% asset allocation.
#Bitcoin & @MicroStrategy: The New Favorite Assets for Hedge Funds@BlackRock IBIT, MicroStrategy – what we know …
👇1-21) Although Bitcoin ETFs have attracted $38.6 billion in net inflows since their January 2024 launch, our analysis suggests that only $17.5 billion (44%)… pic.twitter.com/7Bf95P9NpX
— 10x Research (@10x_Research) February 23, 2025
So, what does that mean? People who invest their capital in Bitcoin through ETFs and futures market activities expect the prices to decline. Investors profit by buying and selling Bitcoin products between two trading platforms. The strategic use of Bitcoin price movements allows them to earn profits even though they do not predict its enduring value.
Hedge Funds Are Dominating the Market
Markus Thielen, head of 10x research, points out that hedge funds and trading firms hold the biggest BlackRock’s IBIT ETF shares. These firms specialize in finding and profiting from market inefficiencies. They prefer this to betting on Bitcoin’s future like traditional long-term investors.
Lately, these arbitrage opportunities have started drying up. Funding rates and basis spreads (key factors in these trades) are too low to justify new positions. The outcome has triggered many trading firms to stop their Bitcoin ETF procurements while they reverse their prior investments.
Source: 10x research
Bitcoin ETF Outflows
Last week, we saw four straight days of outflows, with $552 million in existing Bitcoin ETFs. The movement of capital from Bitcoin ETF products causes concern among many investors as a negative indicator. The strategy remains neutral because hedge funds balance the transaction by selling their ETF positions while purchasing Bitcoin futures.
Real Vision CEO Raoul Pal predicted in 2024 that two-thirds of Bitcoin ETF inflows stemmed from arbitrage trading activities instead of genuine Bitcoin holdings.
The reflexivity of launch BTC ETF > number go up > more buying of ETF > number go up > more buying of ETF > number go up > more buying of ETF… is quite something to behold.
It’s like a supermassive black hole of RIA allocations…and they have $8trn under mgt so we can play…
— Raoul Pal (@RaoulGMI) February 28, 2024
Conclusion
Potential investors need to understand that the major market participants choose to hold Bitcoin ETF for limited time periods before exiting. Even though Bitcoin faces no imminent danger, the market will become more unstable than popular media representations might state.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.