in

‘Retail Isn’t Key Driver Yet’: Raoul Pal Reacts to Controversial Bitcoin ETF Data

Thus, it appears that hedge funds are engaging in market-neutral strategies, such as carry trades or basis trades, which involve holding long positions in spot Bitcoin ETF while shorting futures. This strategy benefits from the price convergence of the futures and spot markets at contract expiration.

A recent review of the top 80 holdings in spot Bitcoin ETFs, which are predominantly controlled by hedge funds, supports this narrative. Commenting on the data, financial analyst Raoul Pal emphasized that the majority of ETF flows are driven by arbitrageurs rather than retail investors.

Pal noted that the main activities of the listed hedge funds are predominantly market neutral, focusing on arbitrage opportunities rather than taking directional risks.

This dynamic explains why significant inflows into spot Bitcoin ETFs have not triggered an explosive rise in the price of the coin. The market-neutral strategies employed by hedge funds offset potential price spikes by simultaneously shorting futures.

As a result, retail investors, who typically drive more pronounced market movements, have not yet had a significant impact.

While current ETF inflows have not dramatically increased Bitcoin’s price, the potential for future growth remains substantial. The lack of significant retail investment suggests that the market may experience a new wave of growth when retail investors eventually enter, providing additional stimulus for BTC’s value.

This article was originally published on U.Today


Source: Cryptocurrency - investing.com

Biden made it easier for student loan borrowers in bankruptcy. This woman, who thought it was a joke, got $158,182 cleared

At Stellantis investor day, cost cuts and China come into focus