Arthur Hayes Predicts $70,000 Bitcoin as Hedge Funds Exit ETF Positions
Arthur Hayes– BitMEX co-founder Arthur Hayes has warned that Bitcoin (BTC) could see a significant drop to $70,000 if large hedge funds begin unwinding their positions in Bitcoin exchange-traded funds (ETFs), such as the BlackRock iShares Bitcoin Trust (IBIT). On February 24, Hayes stated that a “goblin town” could be coming for Bitcoin, as the selling pressure from large hedge funds could drive the price lower.
Hedge Funds and the Basis Trade
Hayes explained that many hedge funds hold positions in Bitcoin ETFs while shorting Bitcoin futures on the CME. These funds are attempting to profit from the difference between the spot price of Bitcoin and the futures price—a strategy known as the “basis trade.” When Bitcoin’s price drops, the basis spread shrinks, creating pressure for hedge funds to unwind their trades. They would then sell their ETF shares and buy back the futures contracts to lock in profits.
If this happens on a large scale, it could lead to a cascade of ETF selling and futures buying, exacerbating Bitcoin’s price drop and potentially creating a feedback loop that further drives down the price.
ETF Outflows Are Accelerating
Outflows from spot Bitcoin ETFs in the United States have already been on the rise. February 24 saw the largest outflow from the 11 spot BTC ETFs in seven weeks, with a total of $517 million exiting the funds. BlackRock’s IBIT experienced a $159 million outflow, while Fidelity’s Wise Origin Bitcoin Fund saw a loss of $247 million. Other funds, including Bitwise, Invesco, VanEck, WisdomTree, and Grayscale, also experienced significant outflows, according to data from CoinGlass.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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