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. 🤑
  • 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 soufflé. 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. 🥳

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. 🌪️

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2025-02-26 08:51