The recent slowdown in Bitcoin ETF selling pressure appears to be driven by shifting market dynamics rather than President Donald Trump’s announcement of a U.S. strategic crypto reserve, according to analysts at Matrixport.
Bitcoin ETF Outflows Ease Amid Hedge Fund Trading Adjustments
Spot Bitcoin exchange-traded funds (ETFs) recorded their largest outflows since their launch in January 2024. However, selling pressure has recently slowed, with analysts suggesting that hedge funds unwinding basis trades played a key role in triggering the sell-off.
In a March 3 post on X, Matrixport analysts linked the decline in ETF selling to the unwinding of hedge fund basis trades. They pointed out that CME open interest had dropped by $8 billion since the December 2024 Federal Open Market Committee (FOMC) meeting, accounting for more than 20% of total ETF inflows.
“The selling pressure may have been tied to the February futures expiry, which is now behind us. With this overhang removed, ETF selling by hedge funds could ease, allowing them to reevaluate arbitrage spreads heading into late March,” Matrixport noted.
Trump’s Crypto Reserve Sparks Market Rally, But Fear Remains
Although ETF selling has cooled, Bitcoin and altcoins surged after Trump reaffirmed his commitment to making the U.S. “the Crypto Capital of the World.” His new executive order directs officials to establish a national crypto reserve, which will include Bitcoin, Ethereum, XRP, Solana, and Cardano.
Bitcoin’s price jumped 8%, breaking above $93,000, while Ethereum followed with an 11% gain. However, the biggest movers were Cardano, which surged 66%, followed by Solana and XRP, which gained 20% and 28%, respectively. Despite the rally, market sentiment remains cautious, with the Crypto Fear & Greed Index still sitting in the “Fear” zone at 33.
While Bitcoin ETF outflows appear to be slowing, analysts suggest that the change is more likely tied to hedge fund trading adjustments rather than Trump’s strategic reserve announcement. Market participants will be closely watching whether the current rally sustains, especially as traders reassess risk amid ongoing macroeconomic uncertainties.
