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Institutional influences in <|endoftext|> Bitcoin ETFs have been one of the biggest stories since their launch last year. With <|endoftext|>Bitcoin reaching new highs in 2025 and ETF assets on the rise, many think that the big players on Wall Street are “long <|endoftext|>Bitcoin”.
But not so fast, says Arthur Hayes.
In an email sent on Monday, the co-founder of BitMix argued that most of the institutional activity in BlackRock’s Bitcoin ETF, which remains the largest Bitcoin ETF by assets, has nothing to do with long-term conviction. On the contrary, he says, the biggest players make simple arbitrage trades.
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“They haven’t been interested in Bitcoin for a long time.”
Hayes points to the fund’s largest shareholders, which are hedge funds and commercial banks, including companies such as… Goldman Sachsand argue that they are primarily involved in what is known as spread trading.
Here’s how it works:
- The funds buy IBIT ETF shares
- sale CME Bitcoin Futures At the same time
- Capture the return difference between ETFs and futures (underlying)
- Use ETF shares as collateral for selling forward contracts
According to Hayes:
“I’m not long on <|endoftext|>Bitcoin. They’re just playing in our court to get a few extra points on the fed funds rates.”
This becomes common even in 2025 with the lower US rates Federal Reserve Cutting prices three times this year, reducing returns in traditional markets and making arbitrage opportunities more attractive.
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Why investing in ETFs can be tricky
When the base becomes high enough, hedge funds rush into trading, creating the impression of large institutional flows.
When the base compresses, as happened several times during 2025, these institutions extend the same trade, causing a strong exit in ETFs.
Hayes says that this dynamic creates a dangerous illusion, and the game becomes something like this:
When fundamentals increase → ETF inflows increase → “Institutions are buying Bitcoin!”
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When Fundamentals Collapse → ETF Outflows Increase → “Institutions Dump Bitcoin!”
Individual investors often misinterpret these flows, which can increase market volatility.
What will change in 2025?
Earlier this year, Bitcoin rose steadily even as the dollar’s liquidity tightened under management Trump Imminent and increasing issuance of the United States Treasury. Contributed flows ETF Fund purchases of digital assets offset the impact of liquidity withdrawals.
But Hayes argues that This stage may be over.
- Several digital asset (DAT) funds traded below net asset value this fall.
- It has become based on trade ETF Less attractive as futures spreads tighten.
- Hedge funds trimmed their positions, resulting in significant outflows via a compound ETF For several weeks at a time.
As these artificial drivers of demand fade, Hayes says Bitcoin must once again respond to the underlying macroeconomic environment.
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“Bitcoin Must Go Down” – Hayes on Short-Term Pressures
According to Hayes:
“Bitcoin should fall to reflect current short-term concerns that dollar liquidity will shrink or not grow as quickly as politicians have promised.”
In other words:
The capital is entered ETF To push Bitcoin higher when liquidity is not justified.
Now, those flows are gone, and liquidity is still important. His message for the end of 2025 was stark:
- Most of the streams ofETF This was a simple arbitrage, not a long-term institutional conviction.
- BlackRock’s biggest “holders” aren’t long Bitcoin, they’re fundamentally long.
- The breakdown of those deals is now affecting the price of Bitcoin.
For individual investors, the lesson is simple:
Flows from ETF It tells you more about the futures curve of institutional conviction.
