Why Bitcoin ETF Outflows May Not Be About SpaceX IPO
The recent outflows of nearly $5.75 billion from Bitcoin exchange-traded funds (ETFs) since mid-May have sparked speculation about institutional investors cashing out of crypto. However, this trend may not be about preparing for the highly anticipated SpaceX IPO, but rather an arbitrage story. The selling pressure has driven bitcoin to a 2026 low, but a closer look at the data reveals a different narrative.
According to Fabian Dori, chief investment officer at a digital asset bank, the ETF outflows are real, but the data does not support the hypothesis that bitcoin is bleeding due to the SpaceX IPO. If investors were selling bitcoin to raise cash for IPO allocations, exchange balances would likely show unusual patterns of outflows and stablecoin market capitalization would decline. However, exchange flows remain normal, and stablecoin supply has seen little contraction.
Derivatives Markets Hold the Key
The strongest argument against the IPO-rotation theory comes from derivatives markets. A decline in CME bitcoin futures open interest has coincided with ETF redemptions, suggesting that a significant portion of the outflows may be linked to the unwinding of cash-and-carry arbitrage trades. This strategy seeks to profit from the gap between bitcoin’s spot price and futures prices, and when the premium narrows, traders unwind the position, generating ETF outflows.
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Conclusion
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Exchange flows remain broadly normal, while stablecoin supply has seen little meaningful contraction. More speculative corners of the digital asset market also continue attracting capital. Products linked to higher-risk crypto assets are still gathering inflows, something Dori says would be unlikely if investors were abandoning the asset class altogether.
Perhaps the strongest argument against the IPO-rotation theory comes from derivatives markets.
Dori pointed to a decline in CME bitcoin futures open interest that has coincided with ETF redemptions. That relationship suggests a significant portion of the outflows may be linked to the unwinding of cash-and-carry arbitrage trades rather than investors reallocating toward equity offerings.
A cash-and-carry trade is a popular institutional arbitrage strategy that seeks to profit from the gap between bitcoin’s spot price and futures prices. Investors buy spot bitcoin, often through an ETF, while also selling bitcoin futures contracts. As long as futures trade at a premium to spot prices, the investor can earn a relatively low-risk yield when the contracts converge at expiry.
When that premium narrows, or funding conditions become less attractive, traders unwind the position by selling their spot exposure and closing their futures shorts. That process can generate ETF outflows even when investors are not turning bearish on bitcoin itself. Instead, the arbitrage opportunity has simply become less profitable.
“Open interest and funding rates moved very positively together over the same period,” Dori said. “That points towards a significant part of the ETF flows being associated with unwinding of funding-rate carry-trade arbitrage.”
Read More: It’s not just bitcoin ETFs. Corporate BTC buying has dried up too
