Bitcoin ETF Inflows Decline as Market Volatility and Arbitrage Opportunities Shrink

The enthusiasm for U.S. spot bitcoin ETFs has waned in 2025, with inflows slowing significantly compared to the strong demand seen in 2024.

Over the past month, U.S. spot bitcoin (BTC) ETFs have registered net outflows of $180 million, making it one of the most substantial withdrawal periods since their launch in early 2024.

Bitcoin ETFs have struggled this year, largely due to bitcoin’s lackluster price action, which has declined by about 10%. While inflows saw a temporary resurgence in the past five days—bringing in roughly $700 million—total net inflows since inception now sit at $36.1 billion, according to Farside data.

Two key factors behind the latest outflows are increased market volatility and the unwinding of the basis trade strategy.

Bitcoin’s price has been on a rollercoaster in 2025, hitting an all-time high of $109,000 in January as optimism grew around President Donald Trump’s expected pro-crypto policies. However, the price later slumped to $76,000 in early March amid growing concerns about the administration’s tariff-heavy economic approach.

Retail investors tend to liquidate holdings in response to market turbulence, while institutional investors are scaling back their involvement in the basis, or cash-and-carry, trade. This strategy involves going long on a bitcoin ETF while simultaneously shorting CME bitcoin futures, benefiting from the premium at which futures trade over spot prices in a delta-neutral fashion.

Currently, this arbitrage trade offers a yield of only around 2%, one of the lowest levels since ETFs were first introduced. With U.S. Treasury yields offering superior low-risk returns, many investors are shifting capital toward traditional fixed-income instruments.

Historically, ETF inflows and outflows have served as useful indicators of bitcoin’s price movements. Accelerated outflows often align with local price bottoms, especially when analyzed over a 30-day moving average. This pattern was evident in March’s price dip, as well as during market pullbacks in April and August 2024.