Decoding the Investor Impact of the U.S. Bitcoin ETF Cash-and-Carry Trade Unraveling

Bitcoin ETF Inflows Sluggish Amid Market Turbulence and Arbitrage Decline

Investor appetite for U.S. spot bitcoin ETFs has waned in 2025, with inflows slowing considerably compared to the strong demand seen throughout 2024.

Over the past month, U.S. spot bitcoin (BTC) ETFs have recorded net outflows of $180 million, ranking among the highest withdrawal periods since their debut in early 2024.

Bitcoin ETFs have underperformed this year, primarily due to bitcoin’s weak price movement, which has fallen approximately 10%. While the last five days have seen a slight rebound—bringing in around $700 million—cumulative net inflows now stand at $36.1 billion, according to Farside data.

Two major factors have contributed to the latest wave of ETF withdrawals: heightened bitcoin price volatility and the unwinding of the basis trade strategy.

Bitcoin has experienced significant price swings in 2025, reaching a record high of $109,000 in January amid optimism over President Donald Trump’s expected crypto-friendly policies, only to drop to $76,000 in early March due to concerns about the administration’s tariff-driven economic agenda.

Retail investors often exit during turbulent price action, treating bitcoin like other high-risk assets. Institutional investors, on the other hand, have been scaling back the basis, or cash-and-carry, trade. This strategy involves holding a long position in a bitcoin ETF while simultaneously shorting CME bitcoin futures to take advantage of price discrepancies in a delta-neutral fashion.

Currently, this arbitrage trade yields just 2%, one of the lowest levels since ETFs launched. With U.S. Treasury yields offering better low-risk returns, many investors are reallocating capital toward safer alternatives.

Historically, ETF inflows and outflows have served as key indicators of bitcoin price trends. Large outflows often coincide with local price bottoms, especially when viewed through a 30-day moving average. This trend was evident in bitcoin’s March low, as well as during downturns in April and August 2024.

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