Thanks to @Phyrex_Ni for the discussion. Let me illustrate an arbitrage process: 1. A spot ETF like IBIT has a fund liquidating, selling a large amount of $IBIT at a discount. 2. When a certain price difference emerges between (the $IBIT stock price) and (the Net Asset Value of BTC per $IBIT share), arbitrageurs buy the discounted $IBIT and sell BTC in the spot/futures market to arbitrage the spread. 3. Selling BTC does not require the market maker/arbitrageur to hold BTC. For example, they can borrow BTC spot to sell, or short BTC via USDⓈ-settled contracts. As long as the arbitrageur has sufficient USD capital, they can sell a corresponding amount of BTC. 4. This completes the transmission from selling $IBIT to selling BTC. For instance, if a fund liquidates and dumps $IBIT equivalent to 60,000 BTC at a 5% discount, and all of it is bought by arbitrageurs, the arbitrageurs simultaneously sell 60,000 BTC in the BTC spot/futures market. 5. The arbitrageur waits for the $IBIT discount to recover, then sells the $IBIT at the normal price while closing an equivalent short position. Throughout this process, no $IBIT shares are redeemed for BTC. 6. Only if the $IBIT discount persists for an extended period, or if the arbitrageur holds too many $IBIT shares, causing liquidity strain and risk, would the arbitrageur redeem the $IBIT for BTC and then sell the spot BTC while closing the equivalent short position. Scenario 5 is the primary trading method for arbitrageurs. Scenario 6 is a special case. Assuming a fund dumps the equivalent of 60,000 BTC, perhaps 54,000 BTC worth of selling is hedged via this arbitrage, with only 6,000 BTC ultimately flowing through the redemption and spot selling route.