US Bitcoin ETF Inflows: Arbitrage or Price Driver?
CryptoNewsTerminal Staff10 Jun, 2024
US Bitcoin ETF Inflows: Arbitrage or Price Driver?
## Inflows into US Bitcoin Spot ETFs: Arbitrage or Price Driver? As inflows into US Bitcoin spot ETFs continue, analysis suggests that these inflows may be part of a broader arbitrage strategy rather than a direct driver of BTC price action. According to CoinDesk, an anonymous trader using the handle CMS Holdings tweeted, "Despite continued inflows into BTC spot ETF, spot BTC price action has been range-bound. This suggests institutions are buying the ETF and selling CME futures to capture basis spread, pocketing the difference." BitMEX Research echoed this sentiment, suggesting that large holders of BTC spot ETFs, including global asset manager Millennium Management and US hedge fund Schonfeld, are likely employing "basis trade" strategies. Basis trading involves exploiting price discrepancies between spot and futures markets to generate profits while hedging risk, irrespective of the overall market direction. This analysis suggests that the recent inflows into US Bitcoin spot ETFs may be driven by arbitrage opportunities rather than a surge in demand for spot Bitcoin. It remains to be seen whether this trend will continue and how it will impact the price of Bitcoin in the long term.
