Bitcoin ETFs Face Heavy Outflows, Recording Second-Biggest Decline of the Year Amid Basis Trade Slump

Bitcoin ETFs See $516M in Outflows as Basis Trade Hits 13-Month Low

U.S. spot bitcoin ETFs recorded their second-largest outflows of the year on Monday, with investors pulling $516.4 million as BTC slid toward the $90,000 mark, according to Farside data.

This latest withdrawal marks the ninth net outflow in ten days, signaling growing unease over bitcoin’s price action, which has been stuck in a tight $94,000–$100,000 range for most of February. The selling pressure intensified early Tuesday, pushing BTC to a three-month low of $88,250.

A key market signal is also flashing warning signs. Velo data reveals that the CME bitcoin futures annualized basis—a widely watched indicator tracking the spread between spot and futures prices—has dropped to just 4%, the lowest level since ETFs launched in January 2024.

The decline threatens the viability of the popular cash-and-carry trade, where funds go long on bitcoin spot markets while shorting futures to lock in a premium. Now, with the futures basis trading below the risk-free yield on U.S. 10-year Treasuries (currently 5%), traders may begin unwinding positions, potentially accelerating ETF redemptions.

BitMEX co-founder Arthur Hayes highlighted the impact of this shift in a post on X:

“Hedge funds loaded up on IBIT, shorting CME futures to milk that juicy yield. But if the basis keeps dropping as BTC dumps, they’ll have to sell IBIT and cover their shorts. With UST yields offering a better deal, they’ll cash out in U.S. hours. $70K might be next!”

With ETF liquidations picking up steam and macro risks weighing on sentiment, bitcoin’s short-term outlook remains uncertain.

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