Crypto Chaos: Investors Flee as Bitcoin ETFs Go Down Like a Bad Movie!

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What to know:

  • BTC, ETH ETFs process large redemptions as carry trades lose appeal. đŸ€‘
  • The market swoon has pushed the CME BTC futures basis down to 4%. 📉

Well, strap in folks, because Tuesday was a day in the world of crypto that could only be described as “a total train wreck.” Bitcoin (BTC), the star of our show, nosedived to a breathtaking $87,000—three months’ worth of highs crumbling faster than an ill-baked soufflĂ©. And guess what? Investors scrambled to yank their hard-earned cash from U.S.-listed spot bitcoin exchange-traded funds (ETFs) at record-breaking rates. It was like the Great Bitcoin Exodus, but with less sandal-wearing and more panic.

According to the ever-reliable number-crunchers at SoSoValue, the 11 spot ETFs experienced a staggering, jaw-dropping, never-before-seen cumulative net outflow of $937.78 million. That’s right, folks—the biggest single-day redemption since these funds began their illustrious journey back in January of 2024. đŸ„ł

And who’s taking the brunt of this financial fiasco? Enter Fidelity’s FBTC, the unfortunate queasy ride of the day, with a whopping outflow of $344.65 million. BlackRock’s IBIT managed to tag along with a less painful, but still not-so-great, $164.37 million exit. The other funds? Oh, they’re just sitting there, dripping with shame, registering outflows of less than $100 million each.

Now, why the sudden flight? One could theorize it’s the lackluster performance of the CME-listed bitcoin futures, which has, like so many things in life, made the cash and carry arbitrage strategy less appealing. Why go chasing cryptocurrencies when the U.S. 10-year Treasury note is out there offering a solid yield of 4.32%? It’s practically begging for attention, and who doesn’t like a reliable offer these days?

Institutional investors had previously adored this cash and carry strategy, which involved purchasing the spot ETF and simultaneously selling the CME futures—effectively a smoother path to profit without the terrifying rollercoaster of price direction risks. But alas, the annualized one-month basis in the CME bitcoin futures has dwindled down to a mere 4% as of Tuesday—its lowest in nearly two years. Talk about a romantic relationship gone sour!

Ether doesn’t want to be left out of the dramatic plunge either, with its futures basis dropping to about 5%. And for the icing on the cake, spot ether ETFs in the U.S. witnessed an outflow of $50 million on Tuesday. My, oh my—what a day to remember! Or forget. đŸŒȘ

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2025-02-26 08:51