In a significant turn of events for the world of digital assets, U.S.-listed spot Bitcoin exchange-traded funds (ETFs) saw a notable surge in inflows on May 19, amassing a hefty $667.4 million. This marks the largest single-day influx since earlier in the month, hinting at a rekindled interest from institutional investors. The iShares Bitcoin Trust (IBIT) alone attracted $306 million of these inflows, pushing its net inflows to a robust $45.9 billion, according to data from Farside Investors.
Institutional Appetite on the Rise
This surge in demand comes on the heels of Bitcoin’s impressive price performance. Bitcoin has been trading above the $100,000 mark for 11 consecutive days, a feat that has revived market confidence and led to increased institutional engagement. The price stability appears to have emboldened investors to dive back into the market, seeking opportunities that may have seemed too risky just months ago. This trend aligns with recent observations in Bitcoin Surges Past $94,000 as Institutional Interest and Market Optimism Grow, highlighting the growing confidence among institutional players.
The annualized basis trade—a strategy where investors go long on spot ETFs and short Bitcoin futures contracts on the CME—has become particularly enticing. Yields are approaching 9%, nearly double the rates seen in April, making this strategy more appealing. Velo data suggests this has led to a modest uptick in basis trade activity, with CME futures trading volumes hitting $8.4 billion on Monday, the highest since late April.
A Glimpse of Market Dynamics
Open interest on CME futures has climbed to 158,000 BTC, a significant increase of over 30,000 BTC contracts from the lows of last month. This rise underscores a growing appetite for leveraged and arbitrage strategies among traders. Yet, despite this upward momentum, both futures volume and open interest are still shy of the heights reached when Bitcoin hit an all-time high of $109,000 in January. For additional context on Bitcoin’s recent price movements, see Bitcoin Jumps Above $97K as Traders Optimistic U.S.-China Trade Deal Possible.
“The upswing in the basis suggests that growth may already be underway, bringing back players who exited earlier this year when the basis dropped to under 5%,” notes crypto analyst Jordan Black. His observation points to a market that is regaining its footing and possibly gearing up for another rally, albeit with some caution in the air.
Recent 13F filings highlight that the Wisconsin State Pension Board withdrew its ETF position in the first quarter, likely due to the less favorable basis trade environment at the time. However, considering that 13F filings are retrospective and the basis spread has since widened to nearly 10%, it’s plausible they reentered the market in the second quarter to capitalize on the improved arbitrage opportunities.
Looking Ahead
As Bitcoin ETFs draw renewed attention, questions linger about the sustainability of this trend. Will the basis trade continue to offer such lucrative returns? And how will market participants respond to potential regulatory shifts in the coming months?
The cryptocurrency market, with its inherent volatility, is never short on surprises. While the current momentum is promising, seasoned investors are likely to remain vigilant, keeping an eye on both macroeconomic factors and market-specific developments. The coming weeks—and indeed the rest of 2025—could be pivotal in shaping the trajectory of Bitcoin and its related financial products.
In a world where digital assets are constantly reshaping the financial landscape, only time will tell if this rally is the beginning of a new era or merely a fleeting phase. For now, the market watches, waits, and continues to strategize.
Source
This article is based on: Bitcoin ETF Inflows Surge as Basis Trade Nears 9%, Signaling Renewed Demand
Further Reading
Deepen your understanding with these related articles:
- Bitcoin Surpasses $95K Amid Resilient U.S. Stocks, Analysts Voice Concerns Over Market Perception (openai)
- Strategy Raising Another $21B to Buy Bitcoin, Posts Large Q1 Loss on BTC Price Decline
- Bitcoin ETFs, gov’t adoption to drive BTC to $1M by 2029: Finance Redefined
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
