Report: Institutional Demand for Bitcoin Overstated

Spot Bitcoin ETFs in the US have attracted a net $38.6 billion since their launch, but only $17.5 billion (44%) represent actual long position purchases, according to 10x Research.

#Bitcoin & @MicroStrategy: The New Favorite Assets for Hedge Funds@BlackRock IBIT, MicroStrategy — what we know …

?1-21) Although Bitcoin ETFs have attracted $38.6 billion in net inflows since their January 2024 launch, our analysis suggests that only $17.5 billion (44%)… pic.twitter.com/7Bf95P9NpX

— 10x Research (@10x_Research) February 23, 2025

“The majority — 56% — is likely linked to arbitrage strategies where short positions in Bitcoin futures offset capital inflows,” the report states.

Traders profit from the difference between spot and futures prices by buying ETFs and selling shorts in derivatives, explained 10x Research founder Markus Thielen.

He believes the data indicates that the real demand for Bitcoin as a long-term portfolio asset is “significantly less than portrayed in the media.”

“Rather than reflecting broad institutional adoption, the buying and selling of BTC-ETFs is primarily driven by funding rates, with many investors focused on short-term arbitrage rather than long-term capital appreciation,” Thielen stated.

The largest holders of positions in BlackRock’s IBIT are hedge funds and trading firms. These players “specialize in exploiting market inefficiencies and capturing yield spreads,” rather than long-term adoption, the expert added.

According to him, current funding rates and basis spreads are too low to justify holding positions and opening new ones.

According to SoSoValue, investors withdrew $559.4 million from Bitcoin ETFs over the past four trading days.

Thielen noted that the media often portrays such outflows as bearish signals. This harms market sentiment, although the process is “essentially neutral.” It involves simultaneously selling fund shares and buying futures, which offsets any directional market impact, the expert emphasized.

In the year following their launch, the cumulative trading volume of spot Bitcoin ETFs exceeded $750 billion.