European Bitcoin Exchange-Traded Products Experience Outflows Following Spot BTC ETFs Launch in the US
According to CoinShares Research Associate Luke Nolan, European bitcoin exchange-traded product (ETP) outflows have increased after the introduction of spot BTC ETFs in the US. This shift indicates that institutional traders in the US are redirecting their investment strategies towards the newly approved spot bitcoin ETFs. Previously, many US institutions used European ETPs for low-risk basis trades. However, with the approval of the new US products, it is now more cost-effective and convenient for these institutions to execute the same basis trades domestically.
Nolan explains that these basis trades offer relatively risk-free opportunities for US institutional investors. They involve shorting bitcoin futures while simultaneously buying the underlying asset through European ETPs. This allows investors to profit from the basis difference between futures and spot prices. With the launch of spot bitcoin ETFs in the US, investors can now execute these trades domestically in a more convenient manner.
Market Shift After Spot Bitcoin ETF Approval
Data from BitMEX Research shows that the four largest European bitcoin ETPs have experienced significant outflows since the launch of spot bitcoin ETFs. The research indicates that people are switching away from higher-fee bitcoin ETPs in Europe. Additionally, there has been a notable surge in outflows from Canadian bitcoin ETPs, suggesting that US investors who previously invested in Canadian ETPs are now shifting towards investing in the new US funds.
Hot Take: Institutional Traders Shifting Towards Spot Bitcoin ETFs
The introduction of spot bitcoin ETFs in the US has led to a market shift as institutional traders redirect their investment strategies. European and Canadian bitcoin exchange-traded products have experienced outflows as US institutions find it more cost-effective and convenient to execute low-risk basis trades domestically. By shorting bitcoin futures and simultaneously buying the underlying asset through spot bitcoin ETFs, investors can profit from the basis difference. This trend highlights the growing popularity of spot bitcoin ETFs among institutional traders in the US.