​According to recent reports from CoinDesk, Bitcoin exchange-traded funds (ETFs) have seen a surge in popularity, with a total net inflow of $18.9 billion and a current holding of 869k BTC. This accounts for approximately 3% of the total bitcoin trading volume.

One factor driving this influx of funds into bitcoin ETFs is the “basis trade”, where investors aim to profit from the price difference between the spot and futures price. This strategy involves going long on the underlying asset while simultaneously shorting the futures contract, which typically trades at a premium. This allows investors to capture the spread between the two prices.

Since their launch in January 2024, bitcoin ETFs have been making headlines as the most successful ETF launch of all time. Currently, there are nine ETFs (excluding Grayscale Bitcoin Trust) holding 646k BTC, while GBTC itself holds an additional 223k BTC, bringing the total to 869k BTC.

Despite their success, bitcoin ETFs still make up a small fraction of the overall bitcoin trading volume. On October 11, the last full trading day, the bitcoin futures market traded $53.4 billion, the spot market traded $4.5 billion, and the ETFs traded $2 billion, representing only 3% of the total market volume.

It is difficult to determine the exact percentage of inflows into bitcoin ETFs that are driven by the basis trade. However, looking at the top holders of the iShares Bitcoin Trust (IBIT), which are disclosed in 13-F filings, it appears that major institutions such as Goldman Sachs and Jane Street Capital, as well as hedge funds like Millenium Management and Capula Management, are using the ETF for this strategy. The only significant holding that does not seem to be part of this strategy is SEO standards. 

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