According to a report by Cointelegraph, Raoul Pal, CEO of macro research firm Real Vision, believes that about two-thirds of the net inflows into Bitcoin spot ETFs may come from arbitrage trading, and retail investors are not yet the “key driver” of such fund products.
Pal made this inference based on data shared by cryptocurrency analyst and MV Capital partner Tom Dunleavy, which shows that the “top 80 holders” of US Bitcoin ETFs are mostly hedge funds, with capital coming from various institutions and individual investors.
On Wednesday (12th), Pal wrote on the X platform:
Source:
Raoul Pal
These 80 companies collectively hold around $10.26 billion worth of Bitcoin spot ETF shares, according to Farside Investors data, which accounts for about two-thirds of the $15.42 billion in net inflows since the launch of Bitcoin spot ETFs on January 11.
Millennium Management, an international hedge fund, holds $1.94 billion worth of Bitcoin ETF shares, making it the company with the most holdings of such fund shares. According to documents submitted to the US Securities and Exchange Commission (SEC), the largest allocation is BlackRock’s iShares Bitcoin Trust Fund (IBIT), and Millennium Management also holds shares in Fidelity, Grayscale, Bitwise, ARK Invest, and 21Shares’ Bitcoin spot ETF.
However, others have questioned Pal’s claims, pointing out that if Grayscale Bitcoin Trust Fund (GBTC) is not included, the total assets under management of the 10 Bitcoin ETFs in the US and the short positions on the Chicago Mercantile Exchange (CME) total $42 billion. Cryptocurrency trader Joseph B stated:
Pal claims he knows that the primary activity of these companies’ capital flows is arbitrage trading, because it is “what these listed hedge funds primarily do, they are not true directional risk-takers,” meaning traders who make decisions based on the expected direction of the Bitcoin price.
Arbitrage trading involves capturing short-term opportunities by exploiting the difference between the net asset value (NAV) of Bitcoin spot ETFs and the price of Bitcoin (underlying asset). Carlos Zendejas, CEO of Deep Q Digital, added:
