The U.S. spot Bitcoin exchange-traded funds (ETFs) just experienced their largest-ever daily outflow, losing a staggering $937.9 million on February 25. This marks the sixth consecutive day of outflows, reflecting a broader trend of investor uncertainty as Bitcoin struggles to maintain its price momentum.
Bitcoin ETFs have collectively shed over $2.4 billion in net outflows throughout February. While Bitcoin briefly surpassed $92,000, it quickly retraced, hitting a 24-hour low of $86,140, fueling investor concerns and triggering ETF sell-offs.
Among the hardest-hit funds:
- Fidelity Wise Origin Bitcoin Fund (FBTC) led the day’s outflows, losing $344.7 million—its largest withdrawal to date.
- BlackRock’s iShares Bitcoin Trust (IBIT) followed with $164.4 million in outflows.
- Bitwise Bitcoin ETF (BITB) saw $88.3 million withdrawn.
- Grayscale’s Bitcoin funds lost a combined $151.9 million, including $66.1 million from GBTC and $85.8 million from BTC Mini Trust ETF.
Why Are Investors Fleeing Bitcoin ETFs?
While some speculate that the ETF outflows are linked to broad crypto market sell-offs, industry experts suggest a deeper trend at play. BitMEX co-founder Arthur Hayes and 10x Research’s Markus Thielen argue that many Bitcoin ETF investors are hedge funds engaging in arbitrage strategies rather than long-term BTC holders.
Record outflows fits with an unwind of futures positions at CME due to basis compression. https://t.co/o0ki6fjWBh
— Arthur Hayes (@CryptoHayes) February 26, 2025
Hayes predicts Bitcoin could tumble to $70,000, explaining that hedge funds used ETFs to go long while shorting CME Bitcoin futures for yield arbitrage. As Bitcoin’s price declines and arbitrage yields shrink, these funds exit ETFs and buy back CME futures, creating a ripple effect in the market.
Thielen echoes this sentiment, emphasizing that the ETF exodus is a market-neutral event rather than outright bearish sentiment. Since these hedge funds simultaneously sell ETFs and buy futures, they offset directional impact, but the withdrawals still add pressure to ETF markets.
Despite the record outflows, ETF Store President Nate Geraci remains bullish, noting that traditional finance still harbors skepticism toward crypto.
Still amazed how much tradfi hates bitcoin & crypto…
— Nate Geraci (@NateGeraci) February 26, 2025
Huge victory laps w/ every downturn.
Hate to break it to you, but no matter how big drawdowns are, it’s not going away.
You can either fight it or educate yourself.
Most in tradfi will fight it.
As the market digests these massive outflows, Bitcoin’s next move will be crucial. If hedge fund-driven selling slows, BTC could stabilize. However, if outflows persist, the psychological $80,000 support level may come into focus before any potential rebound.
For now, Bitcoin ETFs remain a double-edged sword—offering mainstream access to BTC but also exposing it to high-frequency institutional trading strategies that can amplify volatility.
Kataryna Habeliia
Disclaimer: All materials on this site are for informational purposes only. None of the material should be interpreted as investment advice. Please note that despite the nature of much of the material created and hosted on this website, HODL FM is not a financial reference resource and the opinions of authors and other contributors are their own and should not be taken as financial advice. If you require advice of this sort, HODL FM strongly recommends contacting a qualified industry professional.
