VanEck: Massive outflows from Bitcoin ETF may be due to hedge funds unwinding basis trading strategies

Bitcoin ETFs have seen an outflow of about $2.1 billion for six consecutive days, marking the longest period of capital outflows since June last year. Matthew Sigel, head of digital asset research at VanEck, believes that the record-breaking capital outflows may stem from hedge funds unwinding a popular strategy known as "basis trading," which profits from price differences between spot and futures markets. Some funds use ETFs to profit from or hedge against cryptocurrency volatility and short positions in derivatives, he explained: "This strategy involves buying Bitcoin spot (usually through ETFs) while shorting Bitcoin futures to lock in low-risk returns. However, the profitability of this trade has recently collapsed, greatly reducing its appeal. Therefore, hedge funds using ETFs for this trade may have closed their positions, leading to large redemptions." (bnnbloomberg)