Bitcoin ETFs See Record Outflows as Arbitrage Strategy Falters

U.S. Bitcoin ETFs faced an unprecedented outflow on February 25, with investors pulling nearly $940 million from these funds, the largest one-day withdrawal since their launch in January 2024.

This dramatic pullback follows a trend of over $2 billion in outflows during the past week, signaling a shift in market sentiment.

Fidelity’s FBTC led the retreat, losing $344.7 million, while BlackRock’s IBIT followed with $164.4 million in redemptions. Smaller withdrawals impacted other major funds like Bitwise’s BITB and Grayscale’s Mini Bitcoin Trust.

The reason behind this sudden exodus lies in the collapse of a key trading strategy known as the “basis trade.” This tactic, commonly used by institutional investors, exploits the price disparity between Bitcoin’s spot price and futures contracts.

As the futures premium has diminished, many of these traders have been forced to unwind their positions, triggering the sharp outflows.

BitMEX co-founder Arthur Hayes and others suggest this is the main catalyst behind the ongoing sell-off in Bitcoin ETFs.

Author

Alexander Stefanov

Reporter at CoinsPress

Alex is Editor-in-Chief of Coinspress and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.