Hedge funds have virtually eliminated Bitcoin arbitrage trading through ETFs.
The net short position of leveraged funds in BTC futures on the CME fell to 12,955 BTC - 89% below the December 2024 peak and the lowest level since February 2023.
We are talking about the basic trading strategy: funds buy spot BTC, including through ETFs, and at the same time open a short on futures contracts, making money on the price difference. Such transactions created inflows to the ETF, but did not constitute a directional bet on the growth of Bitcoin.
Now most of this arbitrage requirement is gone. Therefore, future inflows into BTC spot ETFs are more likely to reflect genuine buying by investors expecting the asset to grow rather than neutral arbitrage strategies.