ETF Arbitrage Conceals True Bitcoin Demand

[ed]

Analysts point out that the recent inflows into Bitcoin ETFs, such as BlackRock’s IBIT, may not reflect long-term investment conviction. BitMEX co-founder Arthur Hayes explains that much of the ETF activity has been short-term arbitrage, with hedge funds buying ETF shares while shorting CME futures to capture the basis spread. When this trade unwinds, it could mechanically depress Bitcoin prices, highlighting the fragility of the current market.

[Nahid Hossen]

Arbitrage always masks what retail actually sees.

[Abdul Khan]

Real demand is usually higher or lower than ETF flows show.