Bitcoin Market Signals Shift Toward Spot ETFs as CME Futures Activity Declines
Since November 20, U.S.-listed spot Bitcoin ETFs have attracted over $3 billion in net inflows, while open interest in CME Bitcoin futures has dropped significantly. This divergence suggests that market participants may be using ETFs for outright bullish bets rather than arbitrage strategies.
Data from Farside Investors shows that Bitcoin ETFs have seen strong daily inflows, excluding November 25 and 26. On Tuesday, BlackRock’s IBIT ETF recorded a $693.3 million net inflow—the largest since November 20—pushing its lifetime inflows to $32.8 billion. Concurrently, CME futures open interest fell by nearly 30,000 BTC (equivalent to $3 billion), down to 185,485 BTC, according to Glassnode.
This activity is unusual. Historically, ETF inflows and CME open interest have moved in tandem, reflecting the prevalence of price-neutral cash-and-carry strategies. These involve buying ETFs while shorting CME futures to profit from the futures premium without taking on directional price risk. The recent divergence suggests investors are increasingly treating ETFs as straightforward bullish investments.
Carry Trade Still Profitable
Despite this shift, the cash-and-carry strategy remains appealing, offering higher returns than traditional investments like the U.S. 10-year Treasury note or Ethereum staking. As of now, CME’s three-month Bitcoin futures basis offers an annualized return of 16%, a significant but smaller figure compared to holding Bitcoin itself, which has risen over 100% this year.
Earlier in 2023, the cash-and-carry yield reached a peak above 20%, underscoring its profitability. However, the current trend of ETF-driven inflows indicates growing interest in direct exposure to Bitcoin’s price movements rather than hedged arbitrage plays.
This changing dynamic highlights the evolving role of ETFs in the crypto market, with institutions and retail investors alike embracing them as vehicles for directional investment in Bitcoin.
