Fast money flees bitcoin etfs as sovereign funds step in
ITF Team1 min read
Hedge funds and banks cut 68,000 BTC from spot bitcoin ETFs, while wealth platforms and sovereign investors added net buying, according to Galaxy Research.
A Galaxy Research report released Monday shows that nine hedge funds and banks stripped 68,000 bitcoin (about $5.4 billion at current prices) from U.S. spot bitcoin exchange‑traded funds (ETFs) as the cash‑and‑carry arbitrage faded. The sellers, which include Millennium Management, Goldman Sachs, Tudor Investment and six others, trimmed positions by 29‑100%, accounting for most of the 14 % drop in institutional holdings from 355,000 BTC in September 2025 to 307,000 BTC by June 2026.
Why the carry trade collapsed
Galaxy’s head of firm‑wide research, Alex Thorn, said the exodus was driven by a shrinking futures basis, not by a loss of confidence in bitcoin. The front‑month basis fell from an annualised 7.9 % (about 3.9 percentage points above three‑month Treasury bills) to just 0.6 points above bills in the 30 days to Oct 21. After accounting for fees, margin and rolling costs, the trade now yields roughly 1.5 points over cash, making it unattractive for multi‑strategy desks.
Who stepped up to buy
While the fast‑money desks exited, wealth‑management platforms and sovereign investors moved in. Morgan Stanley’s wealth arm, Abu Dhabi’s Mubadala and the Abu Dhabi Investment Council were among the buyers. The remaining roughly 2,200 13F filers added about 20,000 BTC (≈$1.6 billion) in aggregate, and non‑filers such as family offices and individuals only reduced holdings by 6.6 % as bitcoin fell 49 %.
What traders are watching next
- Future basis levels in November and December CME contracts, which still offer a 2‑point premium over Treasury bills
- CFTC data on net long and short positions in bitcoin futures for signs of renewed carry‑trade activity
- Upcoming 13F filings after June to gauge whether the recent inflows into spot ETFs sustain
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- Bitcoin and gold hold near key levels ahead of Fed decision
- Bitcoin bounce rejected at 50‑day SMA ahead of FOMC and earnings
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This article is compiled from international market news for information only. It is not investment advice.