Nine hedge funds and banks withdrew 68,000 BTC — about $5.4 billion — from U.S. spot Bitcoin ETFs. That's according to Galaxy Research, based on reports from large asset managers.
A spot Bitcoin ETF is an exchange-traded fund that holds Bitcoin itself. Institutions entered it not for price appreciation, but for arbitrage: profiting from the price difference between two linked instruments.
What matters to a trader is something else. Big money left not because it is betting against the market, but because the scheme has almost stopped generating income.
Who was selling and who was buying?
Institutional positions shrank by 14%. Those required to report to the SEC on Form 13F held 355,000 BTC in spot Bitcoin ETFs at the end of September 2025 and 307,000 BTC by June 2026. Form 13F is a quarterly report by large asset managers on their positions.
- Nine sellers — Millennium Management, Brevan Howard, Goldman Sachs, Capula, Farallon, D.E. Shaw, Schonfeld, Symmetry and Tudor.
- From 29% to 100% — that's how much they cut their positions.
- 20,000 BTC ($1.6 billion) — that's how much about 2,200 other holders added in parallel.
- Among the buyers — Morgan Stanley's wealth management division, Abu Dhabi's Mubadala fund and the Abu Dhabi Investment Council.
Why did arbitrage stop paying?
The scheme is called cash-and-carry. You buy spot ETF shares and simultaneously short a CME futures contract, capturing the price difference.
- 7.9% annualized. That's what this spread yielded in the 30 days before the all-time high — 3.9 percentage points above three-month U.S. Treasuries.
- 4.8% annualized. In the 30 days to October 21, the yield fell, and the premium over Treasuries was just +0.6 p.p.
- 1.5 p.p. over cash. That's what remains after fees, rolling the position and collateral.
Alex Thorn, head of research at Galaxy: arithmetic, not the price of Bitcoin, drove the managers out of the trade.
What does this mean for a trader?
Institutions are leaving not only ETFs but also CME futures. CFTC data confirms Thorn's words.
- 43,300 → 18,400 BTC — asset managers' net long in CME futures, a 57% drop.
- 71,400 → 30,600 BTC — hedge funds' net short.
- -28% and -51% — open interest in BTC and in dollars. Open interest is the sum of all open positions.
The takeaway for a retail trader is simple. Part of the demand for Bitcoin that rested on the scheme's yield rather than on a price forecast has left. How a prop firm trading account works is covered in the academy, and you can pick a challenge for your market in the calculator.
What's next?
Since the June low, funds have added about 87,000 BTC. Galaxy calls this directional buying rather than arbitrage.
- Directional buying — a bet on price appreciation, not on the price difference between instruments.
- Galaxy's caveat — 13F reporting only goes up to June 2026.
Have you watched this money move your chart?
You see billion-dollar reallocations in ETFs not in the news, but in your own candle. There's nothing you can do about them: we're talking about sums of $5 billion. Your analysis may be no worse than Tudor's; the only difference is the notional. Prop trading works like this: the firm gives you a trading account under its limits, you pay for the evaluation and trade its money. It's worth understanding the mechanics in advance, not when institutions rotate back.