Real Vision Founder: Bitcoin ETFs Get Most of Their Volume from Hedge Funds' Short-Term Arbitrage Operations

On October 18, Raoul Pal, a former Goldman Sachs executive and founder of macro research firm Real Vision, said in a social media post, “One day people will realize that the biggest users of bitcoin ETFs, and most of the volume, are coming from hedge funds, which are arbitraging between spot and futures, and perpetual contracts. The inflows are not primarily directional and only have an impact at the margin.”

Raoul Pal argues that most of the volume of money flowing into Bitcoin ETFs is not based on investors betting on the long-term ups and downs of Bitcoin (i.e., directional investments). Instead, the money has come primarily from hedge funds utilizing ETFs for short-term arbitrage with the goal of profiting from price differentials, rather than relying on bitcoin price movement per se, and most of the activity is not reflective of broader market sentiment on bitcoin price movement.