Bitcoin ETFs Face Record Withdrawals of Over $930M as Rising 10-Year Treasury Yields Dampen Carry Trade Appeal.

Bitcoin ETFs Suffer Largest Single-Day Outflow as Carry Trade Yields Decline

Institutional investors pulled significant funds from U.S.-listed bitcoin and ether spot ETFs on Tuesday as the profitability of the popular carry trade strategy continued to erode.

Bitcoin (BTC) slumped to a three-month low, dipping below $87,000, and dragging the broader crypto market down with it. This coincided with a record-setting $937.78 million in net outflows from spot bitcoin ETFs—the largest single-day withdrawal since their launch in January 2024, per SoSoValue data.

Fidelity’s FBTC saw the heaviest outflows at $344.65 million, while BlackRock’s IBIT lost $164.37 million. Other ETFs also experienced redemptions, though below the $100 million mark.

The sharp decline in the CME bitcoin futures premium has made cash-and-carry trades far less attractive. Previously, traders would buy spot ETFs while shorting CME futures to capture a premium with minimal directional risk. However, with the U.S. 10-year Treasury yield at 4.32%, the yield advantage of this strategy has all but disappeared.

According to Velo Data, the annualized one-month basis in CME bitcoin futures fell to 4% on Tuesday—the lowest in nearly two years and a steep drop from 15% in December. Ether futures have faced a similar decline, with basis rates around 5%, contributing to a $50 million outflow from U.S. spot ether ETFs.

As institutional capital shifts away from crypto ETFs, the market may struggle to find immediate support, with investors potentially reallocating funds to more stable fixed-income opportunities.