The net inflows to spot Bitcoin ETFs launched in January 2024 reached around $39 billion. However, according to a report by 10x Research, a large portion of these inflows stem from short-term trading strategies and arbitrage opportunities. Nevertheless, only a small fraction of investors view Bitcoin as a long-term investment.

Markus Thielen, the Research President of 10x Research, pointed out that only $17.5 billion, or 44%, was attributed to actual long-term investments. Arbitrage strategies, particularly trading methods known as “carry trade,” account for 56% of the inflows. This strategy involves investors purchasing spot Bitcoin while simultaneously opening short positions in Bitcoin futures to profit from price differences between the two markets. Thielen stated that this highlights the fact that the real demand for Bitcoin is much lower than what media reports suggest.

Thielen noted that following the U.S. presidential elections, there has been an increase only in long-term Bitcoin purchases, indicating a shift in buying behaviors. Despite the rise in long-term purchases, the decrease in retail trading volumes has undermined funding rates, leading to an outflow wave in ETFs. Following the resignation of SEC Chairman Gary Gensler, asset management firm 21Shares applied for a Polkadot ETF. This application was made at a critical period for the future of crypto ETFs. On the other hand, Tuttle Capital Management filed for crypto-based leveraged ETFs, including funds tied to popular meme coins. Analysts suggest that these applications are part of a strategy to test the boundaries of crypto-friendly regulators within the SEC that were established during the Trump administration.