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Over $5B Pouring into Bitcoin ETFs – Thanks to Bold Directional Bets
The 11 spot ETFs have attracted over $5.61 billion since early April, according to SoSoValue.
May 17, 2025, 2:18 p.m.
What to know:
- Billions have flowed into U.S.-listed spot bitcoin ETFs, driven by strategic bullish bets rather than arbitrage plays.
- The 11 spot ETFs have attracted over $5.61 billion since April, pushing total inflows since January 2024 to over $41 billion.
- CFTC data indicates leveraged funds have reduced net shorts, suggesting a shift towards directional bets from arbitrage plays.
Billions of dollars have flowed into the U.S.-listed spot bitcoin exchange-traded funds (ETFs) in recent weeks, as the cryptocurrency chalked out a sharp recovery rally from $75,000 to $100,000.
Most of the investment is likely driven by bold, strategic bullish directional bets rather than market-neutral arbitrage plays, data analysis suggests.
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The 11 spot ETFs drew in $2.97 billion in investor money in April, with an additional $2.64 billion flowing in so far this month, according to data source SoSoValue. That has boosted the net inflow since inception in January 2024 to over $41 billion.
Institutions have historically used these ETFs to set up non-directional arbitrage plays to profit from price discrepancies between futures and spot bitcoin markets. The so-called cash and carry arbitrage involves buying ETFs while simultaneously selling the CME futures to pocket the futures premium while bypassing price direction risks.
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But inflows since early April seem driven by bullish directional bets, not arbitrage plays. That's reflected in the Commitment of Traders (COT) report published by the Commodities Futures Trading Commission (CFTC) every week.
The data shows leveraged funds, typically hedge funds and various types of money managers, including registered commodity trading advisors, have trimmed their net shorts to 14,139 contracts from 17,141 contracts in early April, according to data tracked by Tradingster.
The number of shorts would have risen if carry trades had primarily driven the net inflows.
"CFTC data shows leveraged funds didn't significantly increase short positions, indicating most flows were directional bets, not arbitrage," Imran Lakha, founder of Options Insight, in a blog post published on Deribit.
The shift in the nature of inflows in the ETFs suggests large players are increasingly using the ETFs to express a clear market outlook on bitcoin's future direction.
Bitcoin last changed hands at $102,700 at press time, according to CoinDesk data.
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Exchange Review - March 2025
CoinDesk Data's monthly Exchange Review captures the key developments within the cryptocurrency exchange market. The report includes analyses that relate to exchange volumes, crypto derivatives trading, market segmentation by fees, fiat trading, and more.
What to know:
Trading activity softened in March as market uncertainty grew amid escalating tariff tensions between the U.S. and global trading partners. Centralized exchanges recorded their lowest combined trading volume since October, declining 6.24% to $6.79tn. This marked the third consecutive monthly decline across both market segments, with spot trading volume falling 14.1% to $1.98tn and derivatives trading slipping 2.56% to $4.81tn.
- Trading Volumes Decline for Third Consecutive Month: Combined spot and derivatives trading volume on centralized exchanges fell by 6.24% to $6.79tn in March 2025, reaching the lowest level since October. Both spot and derivatives markets recorded their third consecutive monthly decline, falling 14.1% and 2.56% to $1.98tn and $4.81tn respectively.
- Institutional Crypto Trading Volume on CME Falls 23.5%: In March, total derivatives trading volume on the CME exchange fell by 23.5% to $175bn, the lowest monthly volume since October 2024. CME's market share among derivatives exchanges dropped from 4.63% to 3.64%, suggesting declining institutional interest amid current macroeconomic conditions.
- Bybit Spot Market Share Slides in March: Spot trading volume on Bybit fell by 52.1% to $81.1bn in March, coinciding with decreased trading activity following the hack of the exchange's cold wallets in February. Bybit's spot market share dropped from 7.35% to 4.10%, its lowest since July 2023.
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- Ethena's USDe becomes fifth stablecoin to surpass $10 billion market cap in just 609 days, while Tether's dominance continues to slip.
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