Key Points
Market Dynamics Influence Bitcoin ETF Selling
Spot Bitcoin exchange-traded funds experienced their most significant outflows since their inception in January 2024.
The selling pressure seems to be easing, but not due to President Donald Trump’s strategic crypto reserve announcement.
Instead, it appears that hedge funds unwinding basis trades have led to this, as per Matrixport analysts.
In a post on March 3, these analysts proposed that the sell-off was likely triggered by hedge funds unwinding basis trades.
This theory aligns with the $8 billion decrease in CME open interest since the FOMC meeting in December 2024, accounting for over 20% of total ETF inflows.
“The selling pressure may have been linked to the February futures expiry, which is now past us.
With this overhang removed, ETF selling by hedge funds could ease, allowing them to reassess arbitrage spreads heading into late March,” stated Matrixport.
Effects on Cryptocurrencies
The duration of the pause in selling pressure remains uncertain.
However, Bitcoin and altcoins saw a quick surge after Trump reiterated his commitment to making the U.S. the “Crypto Capital of the World.”
His new executive order instructs officials to create a national crypto reserve, including Bitcoin (BTC), Ethereum (ETH), and surprisingly, XRP (XRP), Solana (SOL), and Cardano (ADA).
As Bitcoin increased by 8%, breaking $93,000, Ethereum followed with an 11% rise.
However, these gains were modest compared to Cardano’s 66% surge, while Solana and XRP saw increases of 20% and 28%, respectively.
Despite the rally, the Crypto Fear & Greed Index remains in “Fear” territory at 33.
