Bitcoin ETF Inflows Surge as Basis Trade Nears 9%, Indicating Renewed Demand

By James Van Straten
Updated: May 20, 2025, 2:20 p.m.
Published: May 20, 2025, 8:08 a.m.

In a noteworthy development for the cryptocurrency market, U.S.-listed spot Bitcoin exchange-traded funds (ETFs) recorded impressive net inflows of $667.4 million on May 19, marking the highest single-day total since early May. This surge signals a revitalization of institutional interest in Bitcoin, particularly with regards to the iShares Bitcoin Trust, which received $306 million in inflows, bringing its total assets to $45.9 billion, according to data from Farside Investors.

Renewed Investor Confidence

The renewed demand for Bitcoin ETFs appears to be driven by the cryptocurrency’s sustained performance, maintaining a trading price above $100,000 for 11 consecutive days. This price stability has restored investor confidence, encouraging more institutions to explore Bitcoin investment avenues once again.

Additionally, traditional trading strategies such as the basis trade have gained traction in recent weeks. The basis trade involves going long on a Bitcoin spot ETF while simultaneously shorting Bitcoin futures contracts, a strategy that has become increasingly attractive as yields approach 9%—almost double the rates available in April.

Increased Trading Activity on CME Futures

This renewed interest in basis trading has led to a discernible increase in activity on the Chicago Mercantile Exchange (CME). On Monday, CME futures volumes surged to $8.4 billion, approximately equivalent to 80,000 BTC, marking the highest trading volume since April 23. Concurrently, open interest in Bitcoin futures rose to 158,000 BTC, an increase of over 30,000 BTC contracts since the lows observed in April. These indicators underscore a growing appetite for leveraged trading and arbitrage opportunities within the Bitcoin market.

Despite this growth, both futures trading volume and open interest remain considerably lower than the peaks seen during January’s all-time high of $109,000 for Bitcoin. This suggests that there is still significant potential for further expansion in the market as trading strategies evolve.

A Potential Return of Institutional Players

The upswing in basis trading activities could signify the re-entry of institutional investors who had previously exited the market due to unfavorable conditions earlier this year when the basis narrowed below 5%. Recent 13F filings revealed that the Wisconsin State Pension Board had exited its ETF position in the first quarter, likely in response to less favorable trading conditions. However, as the basis has since widened from 5% to nearly 10%, it stands to reason that the institution may have re-entered the market in the second quarter to capitalize on the improved arbitrage opportunities.

Conclusion

Overall, the surge in Bitcoin ETF inflows alongside the rise in basis trade yields showcases a rejuvenated interest in Bitcoin investments among institutional players. As the cryptocurrency landscape continues to shift, market participants will be keenly observing whether this trend persists and what implications it may have for broader market dynamics.

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