Bitcoin ETFs See $516M Outflow as Market Jitters Grow, BTC Drops Below $90K

U.S. spot Bitcoin (BTC) exchange-traded funds (ETFs) recorded their second-largest outflow of the year on Monday, shedding $516.4 million, according to Farside data. This marked the ninth net outflow in 10 days, reflecting growing uncertainty as BTC struggled between $94,000 and $100,000.

On Tuesday, Bitcoin broke below its three-month trading channel, plunging under $90,000 to a low of $88,250. Meanwhile, Velo data shows the Bitcoin CME annualized basis—the gap between spot and futures prices—dropped to 4%, the lowest since ETFs launched in January 2024. This decline impacts the cash-and-carry trade, a market-neutral strategy where investors profit from the spread between spot and futures markets.

Typically, traders go long on BTC in the spot market while shorting futures, collecting a premium until contract expiry. However, with the basis trade now yielding less than the U.S. 10-year Treasury’s 5% return, investors may shift funds, leading to further ETF outflows. Closing these positions also forces traders to buy back Bitcoin futures, potentially triggering more market volatility.

BitMEX co-founder Arthur Hayes highlighted this scenario in a recent X post, noting that many IBIT ETF holders used the long-ETF, short-futures strategy to earn yield. With basis rates nearing U.S. Treasury yields, these investors are likely to unwind their trades during U.S. hours to lock in profits. Hayes speculated that Bitcoin could drop as low as $70,000 if this trend continues.

As Bitcoin struggles to regain momentum, investors are closely watching ETF flows and derivatives market activity, which could dictate BTC’s next move.