VanEck: Bitcoin ETF's huge outflow of funds may be due to hedge funds' unwinding of basis trading strategies

Odaily News Bitcoin ETFs have seen outflows of about $2.1 billion for six consecutive days, the longest outflow cycle since June last year. Matthew Sigel, head of digital asset research at VanEck, believes that the record outflows may stem from hedge funds unwinding a popular strategy called "basis trading," which exploits price differences between spot and futures markets to profit. Some funds use ETFs to profit from cryptocurrency volatility or hedge 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 profits from this trade have collapsed recently, making it much less attractive. As a result, hedge funds that use ETFs for this trade may have closed their positions, leading to large redemptions." (bnnbloomberg)