VanEck: BTCETF massive fund outflows may be due to Hedging funds unwinding basis trading strategies

Odaily Planet Daily BTC ETF has seen a continuous outflow of about $2.1 billion for six days, marking the longest outflow period since June last year. Matthew Sigel, director of digital asset research at VanEck, believes that the record outflow may be due to hedge funds unwinding a popular strategy called “basis trading”, which profits from the price difference between the spot and futures markets. Some funds use ETFs to profit from the fluctuation of cryptocurrencies or to hedge short positions in derivative products. He explained, “This strategy involves buying BTC Spot (usually through ETFs) while shorting BTC futures to lock in low-risk returns. However, the profitability of this trade has recently collapsed, significantly reducing its attractiveness. As a result, hedge funds using ETFs for this trade may have closed positions, leading to a large redemption.” (bnnbloomberg)