Real Vision CEO Raoul Pal suggests that around two-thirds of the net inflows into spot Bitcoin exchange-traded funds (ETFs) are likely driven by arbitrage trading rather than retail investors. This information was shared in a post on June 11, referencing data provided by crypto analyst Tom Dunleavy and MV Capital partner.
According to the data, the top 80 holders of United States-based spot Bitcoin (BTC) ETFs are primarily hedge funds receiving capital from a mix of institutional and individual investors. These 80 firms collectively possess approximately $10.26 billion worth of spot Bitcoin ETF shares, which represents a significant portion of the $15.42 billion in net inflows since the launch of spot Bitcoin ETFs on Jan. 11.
One notable player in this space is international hedge fund Millennium Management, holding $1.94 billion in Bitcoin ETF shares, the largest among all firms. On May 16, Millennium Management diversified its Bitcoin ETF holdings across multiple issuers, including Bitwise, Grayscale, Fidelity, BlackRock, and ARK and 21Shares’ ETFs.
While some have disputed Pal’s assertions, pointing out that the 10 U.S. Bitcoin ETFs, excluding the Grayscale Bitcoin Trust (GBTC), have $42 billion in assets under management along with short interest on the CME, Pal remains firm in his belief that the flows from these firms are predominantly driven by arbitrage strategies rather than directional bets on Bitcoin’s price movements.
Arbitrage trading involves capitalizing on short-term opportunities by exploiting differences between the net asset value of the spot Bitcoin ETF and the price of Bitcoin itself. This approach contrasts with traditional “Buy and Hold” investment strategies typically associated with long-term investors.
It is important to note that this article does not offer investment advice or recommendations. All investment and trading decisions involve inherent risks, and individuals should conduct thorough research before making any investment decisions.