Real Vision CEO Raoul Pal suggests that approximately two-thirds of the net inflows into spot Bitcoin exchange-traded funds (ETFs) are a result of arbitrage trading. Pal made this assertion in a post on June 11, citing data provided by crypto analyst Tom Dunleavy of MV Capital.
According to the data, the top 80 holders of United States-based spot Bitcoin (BTC) ETFs are hedge funds that have received capital from a mix of institutional and individual investors. These 80 firms collectively possess about $10.26 billion in spot Bitcoin ETF shares, which represents roughly two-thirds of the total $15.42 billion in net inflows since the launch of spot Bitcoin ETFs on Jan. 11.
One of the largest holders of Bitcoin ETF shares is international hedge fund Millennium Management, which has $1.94 billion worth of shares. On May 16, Millennium Management diversified its Bitcoin ETF holdings by investing in Bitwise, Grayscale, Fidelity, BlackRock, and ARK and 21Shares’ ETFs.
Despite Pal’s claims, some argue that the recent inflows into Bitcoin ETFs could be attributed to basis trading. However, the basis trade accounts for less than 15% of the overall ETF flows, excluding the Grayscale Bitcoin Trust (GBTC).
Arbitrage trading involves identifying short-term opportunities by exploiting differences between the net asset value of the spot Bitcoin ETF and the price of Bitcoin itself. Pal believes that the flows from these firms are primarily driven by arbitrage trading, rather than directional risk-taking.
It is important to note that this article does not offer investment advice or recommendations. All investment and trading decisions involve risks, and readers are encouraged to conduct their own research before making any financial decisions.