In the last month, approximately $180 million has exited U.S. spot bitcoin (BTC) ETFs, marking one of the highest withdrawal rates since these ETFs began trading at the start of 2024.
The ETFs have underperformed in 2025, with lackluster inflows primarily due to bitcoin’s decline of about 10%. Although there has been a slight resurgence over the past five days, yielding around $700 million in net inflows, the cumulative net inflows since their launch currently total $36.1 billion.
Two key factors have contributed to this month’s outflow: increased price volatility of bitcoin and the unwinding of what is known as the basis trade.
Bitcoin’s price has experienced significant fluctuations this year, reaching an all-time high of $109,000 in January amid expectations of a favorable regulatory environment under President Donald Trump, before dropping to as low as $76,000 in early March due to concerns regarding Trump’s tariff-based trade policies.
During periods of pronounced volatility, retail investors typically engage in selling, often driven by emotional responses similar to those seen with other high-risk assets.
Institutional investors are also unwinding the basis or cash-and-carry trade, which involves holding a long position in the ETF while simultaneously shorting CME bitcoin futures. A short position anticipates a drop in price, and this delta-neutral strategy seeks to profit from the premium that futures prices have over spot prices.
A delta-neutral trading strategy mitigates risks from price changes in the underlying asset by balancing positions to minimize directional risk and maintain a neutral market stance.
Currently, the arbitrage from this strategy offers only about 2%, one of the lowest yields since the ETFs were initially approved. With U.S. Treasuries presenting safer investments with better returns, many investors are leaning towards these lower-risk options.
The flow of ETFs often indicates potential market turning points. Aggressive outflows tend to align with local price bottoms in bitcoin, particularly when analyzed with a 30-day moving average. This trend was evident during bitcoin’s low in March, as well as in previous dips in August 2024 and April 2024.