Here’s why bitcoin ETF outflows may have little to do with SpaceX mania

Exchange flows remain broadly normal, while stablecoin supply has seen little meaningful contraction. More speculative corners of the digital asset market also continue attracting capital. Products linked to higher-risk crypto assets are still gathering inflows, something Dori says would be unlikely if investors were abandoning the asset class altogether.

Perhaps the strongest argument against the IPO-rotation theory comes from derivatives markets.

Dori pointed to a decline in CME bitcoin futures open interest that has coincided with ETF redemptions. That relationship suggests a significant portion of the outflows may be linked to the unwinding of cash-and-carry arbitrage trades rather than investors reallocating toward equity offerings.

A cash-and-carry trade is a popular institutional arbitrage strategy that seeks to profit from the gap between bitcoin’s spot price and futures prices. Investors buy spot bitcoin, often through an ETF, while also selling bitcoin futures contracts. As long as futures trade at a premium to spot prices, the investor can earn a relatively low-risk yield when the contracts converge at expiry.

When that premium narrows, or funding conditions become less attractive, traders unwind the position by selling their spot exposure and closing their futures shorts. That process can generate ETF outflows even when investors are not turning bearish on bitcoin itself. Instead, the arbitrage opportunity has simply become less profitable.