The data marks a shift from the strong initial inflows that followed the funds’ January 2024 launch, as hedge funds reduced exposure and the futures-based arbitrage trade that initially fueled demand began to unwind.
These moves were consistent with the collapse of the BTC futures basis trade, which had enabled arbitrage-driven strategies that became less profitable by late March.
The annualized premium in CME futures over spot prices, which incentivized long spot ETF and short futures pairings, fell from around 15% earlier in the year to near zero by the end of Q1.
Brown University added a $4.9 million position, and filings also showed modest entries from various endowments and sovereign entities.
That basis trade, widely popular during the ETFs’ early months, became compressed by increased participation and more efficient markets, limiting its appeal to leveraged players.
While 13F filings only provide a partial snapshot, covering U.S.-based firms managing over $100 million, they offer insight into the shifting nature of ETF exposure. Importantly, they do not capture offshore flows or smaller advisors, and may understate longer-term interest still building beneath the surface.
Some exposure will also shift from ETFs to other instruments, such as CME futures or over-the-counter swap structures, which are not visible in these disclosures.
Q1’s data marks the first clear deceleration in the Bitcoin ETF era, with hedge-fund allocations falling as market conditions shift and short-term strategies unwind.
The next 13F cycle in July will provide a clearer picture of whether longer-horizon allocators continue to step in to fill the gap left by arbitrage-driven trades.
