Key Takeaways
- • Nine hedge funds and banks, including Millennium Management, Goldman Sachs, Capula, D.E. Shaw, Schonfeld, Symmetry, Tudor, Brevan Howard and Farallon, cut about 68,000 BTC of spot bitcoin ETF exposure between September 2025 and June 2026, worth roughly $5.4 billion at current prices, according to Galaxy Research.
- • Galaxy Research attributes the exodus to collapsing returns on the cash-and-carry basis trade rather than a new view on bitcoin's price.
- • The annualized CME front-month basis fell from a 7.9% average in the 30 days before bitcoin's record high to 4.8% over the 30 days through October 21, only 0.6 points above three-month T-bill yields.
- • CME bitcoin open interest is down 28% in bitcoin terms and 51% in dollar terms from its peak, near a 14-month low, and the CFTC-classified hedge fund net short fell from 71,400 BTC to 30,600 BTC.
- • Total US spot bitcoin ETF net assets fell from a peak near $169 billion on October 6, 2025 to about $105 billion by October 28, 2026.
Summary
Nine hedge funds and banks have pulled roughly 68,000 bitcoin of spot ETF exposure since September 2025, according to Galaxy Research, a reduction worth about $5.4 billion at current prices. The firms named include Millennium Management, Goldman Sachs, Capula Management, D.E. Shaw, Schonfeld Strategic Advisors, Symmetry Investments, Tudor Investment, Brevan Howard and Farallon. The article argues that much of this capital was never a directional bet on bitcoin but an arbitrage position that has stopped paying.
The trade worked by buying spot bitcoin through an ETF such as BlackRock's iShares Bitcoin Trust (IBIT), shorting an equivalent amount of CME bitcoin futures, and capturing the basis between futures and spot prices. The annualized basis approached 25% during surges in 2024 but had fallen to about 10% by May 2025. In the 30 days before bitcoin's record high, the front-month basis averaged 7.9% annualized, 3.9 percentage points above T-bill yields. In the 30 days through October 21, it had compressed to 4.8%, only 0.6 points above T-bills, a spread the article describes as too thin to justify the margin requirements and operational burden of a leveraged pair trade.
Brevan Howard, London-based macro fund, illustrates the unwind. Its IBIT position peaked in Q2 2025 at about 37.5 million shares worth roughly $2.3 billion. Its filing covering June 30, 2026 showed about 7.2 million shares worth nearly $240 million, alongside call options on another 7.23 million shares with a notional value of about $241 million, a cut of roughly 70% during the second quarter of 2026.
The futures market reflects the same retreat. CME open interest is down 28% in bitcoin terms and 51% in dollar terms from its peak, near a 14-month low. Asset managers' net long in CME bitcoin futures has fallen 57% since bitcoin's all-time high, to about 18,400 BTC. The CFTC-classified hedge fund net short, the futures leg of the carry trade, has more than halved from 71,400 BTC to 30,600 BTC, which the article reads as a full close-out of spot and futures positions rather than a bullish shift.
Total US spot bitcoin ETF net assets peaked near $169 billion on October 6, 2025, fell to roughly $70.9 billion at the end of June 2026, and stood at about $105 billion on October 28, 2026. The article notes that price moves explain part of the decline but that the exit of basis-chasing hedge fund capital accounts for a significant share, complicating any reading of ETF flows as a measure of genuine bitcoin demand. Decrypt and other outlets covering the Galaxy findings report that sovereign wealth funds have been buying as fast-money funds sold, a holder base with a longer horizon.
The trade worked by buying spot bitcoin through an ETF such as BlackRock's iShares Bitcoin Trust (IBIT), shorting an equivalent amount of CME bitcoin futures, and capturing the basis between futures and spot prices. The annualized basis approached 25% during surges in 2024 but had fallen to about 10% by May 2025. In the 30 days before bitcoin's record high, the front-month basis averaged 7.9% annualized, 3.9 percentage points above T-bill yields. In the 30 days through October 21, it had compressed to 4.8%, only 0.6 points above T-bills, a spread the article describes as too thin to justify the margin requirements and operational burden of a leveraged pair trade.
Brevan Howard, London-based macro fund, illustrates the unwind. Its IBIT position peaked in Q2 2025 at about 37.5 million shares worth roughly $2.3 billion. Its filing covering June 30, 2026 showed about 7.2 million shares worth nearly $240 million, alongside call options on another 7.23 million shares with a notional value of about $241 million, a cut of roughly 70% during the second quarter of 2026.
The futures market reflects the same retreat. CME open interest is down 28% in bitcoin terms and 51% in dollar terms from its peak, near a 14-month low. Asset managers' net long in CME bitcoin futures has fallen 57% since bitcoin's all-time high, to about 18,400 BTC. The CFTC-classified hedge fund net short, the futures leg of the carry trade, has more than halved from 71,400 BTC to 30,600 BTC, which the article reads as a full close-out of spot and futures positions rather than a bullish shift.
Total US spot bitcoin ETF net assets peaked near $169 billion on October 6, 2025, fell to roughly $70.9 billion at the end of June 2026, and stood at about $105 billion on October 28, 2026. The article notes that price moves explain part of the decline but that the exit of basis-chasing hedge fund capital accounts for a significant share, complicating any reading of ETF flows as a measure of genuine bitcoin demand. Decrypt and other outlets covering the Galaxy findings report that sovereign wealth funds have been buying as fast-money funds sold, a holder base with a longer horizon.
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