U.S. spot Bitcoin exchange-traded funds (ETFs) recorded their largest-ever daily net outflows on February 25, as Bitcoin (BTC) prices dipped below $90,000 amid continued market volatility.
According to data from Farside Investors, the 11 spot Bitcoin ETFs collectively saw $937.9 million in net outflows, marking the sixth consecutive day of withdrawals.
The ETF exodus came as Bitcoin fell 3.4% over the past 24 hours, plunging to a 24-hour low of $86,140 after briefly surpassing $92,000 earlier in the day.
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Crypto Market Volatility Shakes Investor Confidence in Digital Asset Products
Market sentiment has been rattled by recent price swings, prompting investors to pull back from cryptocurrency-linked financial products.
Among the funds affected, the Fidelity Wise Origin Bitcoin Fund (FBTC) led with $344.7 million in outflows. This was a record daily loss for the ETF. BlackRock’s iShares Bitcoin Trust (IBIT) followed, losing $164.4 million.
Other notable outflows included $88.3 million from the Bitwise Bitcoin ETF (BITB) . The combined total of $151.9 million were from Grayscale’s two funds—with $66.1 million exiting the Grayscale Bitcoin Trust (GBTC) and $85.8 million leaving the Bitcoin Mini Trust ETF (BTC).
So far in February, investors have withdrawn approximately $2.4 billion from these Bitcoin ETFs, with only four trading days seeing net inflows. The latest withdrawals underscore growing investor caution as Bitcoin’s price struggles to regain upward momentum.
Commenting on the outflows, Nate Geraci, President of the ETF Store, expressed surprise at traditional finance’s persistent skepticism toward cryptocurrencies.
“I’m still amazed at how much TradFi hates Bitcoin and crypto,” Geraci posted on X (formerly Twitter) on February 26, adding that critics are quick to celebrate market downturns. “No matter how big the drawdowns are, it’s not going away,” he asserted.
Still amazed how much tradfi hates bitcoin & crypto…
Huge victory laps w/ every downturn.
Hate to break it to you, but no matter how big drawdowns are, it’s not going away.
You can either fight it or educate yourself.
Most in tradfi will fight it.
— Nate Geraci (@NateGeraci) February 26, 2025
Market analysts attribute much of the ETF volatility to hedge funds engaging in arbitrage strategies rather than long-term BTC investors. Arthur Hayes, co-founder of BitMEX, predicted on February 24 that Bitcoin could drop to $70,000 as ETF outflows persist.
Hayes explained that many IBIT holders are hedge funds that go long on ETFs while shorting CME futures to earn yields surpassing those from U.S. Treasurys.
However, as Bitcoin’s price declines and the yield spread narrows, these funds are unwinding their positions, selling ETFs while buying back futures.
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Over Half of Spot Bitcoin ETF Investors Engage in Arbitrage Strategies, Says 10x Research
Supporting this view, Markus Thielen, head of research at 10x Research, noted that over half of spot Bitcoin ETF investors are involved in ETF arbitrage strategies.
He said that the majority of the inflows, about 56%, are linked to arbitrage strategies, particularly the “carry trade.”
While the unwinding of these trades causes significant ETF outflows, Thielen stressed that the process is market-neutral, with simultaneous selling of ETFs and purchasing of Bitcoin futures effectively offsetting broader price impacts.
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Key Takeaways
- U.S. spot Bitcoin ETFs saw a record $937.9 million in daily outflows on February 25 as Bitcoin fell below $90,000.
- Much of the ETF volatility is driven by hedge funds engaging in arbitrage strategies rather than long-term BTC investments.
- Over half of spot Bitcoin ETF investors use carry trade strategies.
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