Tuesday marked a challenging day for the cryptocurrency market, as Bitcoin (BTC) experienced a significant decline, falling to three-month lows below $87,000. This downturn had a pronounced ripple effect, dragging the broader market down as investor sentiment diminished.
One of the most striking aspects of the day’s trading was the unprecedented withdrawal of funds from U.S.-listed spot Bitcoin exchange-traded funds (ETFs). According to data from SoSoValue, the total net outflow across the 11 spot ETFs reached a staggering $937.78 million, marking the largest single-day redemption since these funds began trading in January 2024.
Leading the charge in outflows was Fidelity’s FBTC, which saw redemptions totaling $344.65 million. Not far behind, BlackRock’s IBIT experienced outflows of $164.37 million, while the remaining funds collectively recorded redemptions of less than $100 million each.
This decline in appetite for spot ETFs may be linked to the diminishing premium in CME-listed Bitcoin futures, which has reduced the appeal of cash and carry arbitrage strategies. At present, the returns offered by these strategies are only marginally greater than those associated with the U.S. 10-year Treasury note, which yields 4.32% as of the latest figures.
The cash and carry strategy, which has gained significant traction among institutional investors since early last year, involves purchasing the spot ETF and simultaneously selling the CME futures to capitalize on the premium, all while mitigating exposure to price direction risks.
Recent data from Velo Data reveals that the annualized one-month basis (premium) for CME Bitcoin futures dipped to 4% on Tuesday, reaching its lowest point in nearly two years and plummeting from almost 15% recorded in December. This steep decline suggests that the yield associated with the cash and carry strategy has been significantly affected.
The situation is similarly concerning for ether futures, where the basis has also decreased sharply to approximately 5%. On the same day, U.S.-listed spot ether ETFs faced outflows totaling $50 million, further highlighting the broader market trend.
As the crypto landscape continues to fluctuate, market participants will be closely monitoring these developments, particularly the impact of changing arbitrage opportunities on institutional investment strategies.
