BitMEX co-founder Arthur Hayes says tha tBitcoin could potentially fall to $70,000 if large hedge funds unwind their positions in US Bitcoin exchange-traded funds.
Bitcoin 
BTCUSD “goblin town” is incoming, Hayes said on X on Feb. 24, positing that there could be large outflows from spot BTC ETFs such as the BlackRock iShares Bitcoin Trust (IBIT).
Lots of IBIT holders are hedge funds that went long on ETFs while shorting CME futures to earn a low-risk yield greater than that from short-term US Treasurys, he explained.
However, if that yield — called the “basis spread” — falls as the price of Bitcoin does, “then these funds will sell IBIT and buy back CME futures,” he said.
These funds are currently in profit, and given that the basis spread is close to Treasury yields, “they will unwind during US hours and realize their profit,” plunging BTC back to $70,000, he said.
In an investor note on Feb. 23, 10x Research head Markus Thielen said that a big part of Bitcoin ETF demand is from hedge funds playing this arbitrage game rather than long-term holders.
This “basis trade” aims to capture the spread between the spot price of Bitcoin as tracked by ETFs like IBIT and the Bitcoin futures price on CME.
If Bitcoin’s price drops, the futures premium can also shrink, creating a problem for hedge funds, which begin to unwind their trades by selling Bitcoin ETF shares and buying back short CME futures.
When this happens at scale, the coordinated unwind means major selling of spot ETFs and upward pressure on futures. This selling pressure exacerbates Bitcoin’s price declines, potentially causing a feedback loop where more funds rush to exit their positions.
BTC plunged more than 5% over the past day, hitting an intraday low of $91,000 before making a minor recovery on Feb. 25.
ETF outflows accelerate
Meanwhile, outflows from spot ETFs in the US have already started to increase.
The Feb. 24 trading day saw the largest outflow from the eleven spot BTC ETFs in seven weeks, with $517 million exiting on aggregate, culminating in a five consecutive trading day outflow streak.
The BlackRock fund saw an outflow of $159 million, according to HODL15Capital, while Fidelity’s Wise Origin Bitcoin Fund lost a whopping $247 million. There were also outflows from the Bitwise, Invesco, VanEck, WisdomTree and Grayscale funds, according to CoinGlass.
