Bitcoin ETFs Attract Billions Amid Bullish Market Bets

Billions of dollars have recently flowed into U.S.-listed spot Bitcoin ETFs, reflecting strong bullish sentiment as the cryptocurrency surged from $75,000 to over $100,000. Data shows that these inflows are largely driven by directional bets rather than traditional market-neutral strategies.

According to SoSoValue, the 11 spot Bitcoin ETFs saw $2.97 billion in inflows during April and another $2.64 billion so far this month. Since their debut in January 2024, total net inflows have surpassed $41 billion. Historically, institutional investors used these ETFs for arbitrage—specifically, the “cash and carry” trade—by buying spot ETFs and selling CME Bitcoin futures to profit from pricing differences while minimizing directional exposure.

However, recent data from the U.S. Commodity Futures Trading Commission (CFTC) suggests a different narrative. The Commitment of Traders (COT) report shows leveraged funds reduced their net short positions from 17,141 to 14,139 contracts since early April. If arbitrage was the primary strategy, short positions would have likely increased. This indicates that current ETF inflows are fueled more by bullish positioning than hedging.

Options Insight founder Imran Lakha noted in a Deribit blog that the lack of growth in short positions confirms these flows are directional in nature. It signals that hedge funds and institutional investors are increasingly using spot Bitcoin ETFs to express long-term confidence in Bitcoin’s price trajectory.

As of the latest update, Bitcoin is trading around $102,700, according to CoinDesk. The shift in ETF usage marks a significant moment for Bitcoin’s institutional adoption, suggesting that investor sentiment is becoming more aggressively bullish in anticipation of further gains.