• Now there’s an easier method for them to do it locally with spot bitcoin ETFs, Nolan noted.
• There has been a significant outflow of capital from the four biggest European bitcoin ETPs.

Since spot BTC ETFs were introduced in the US, one analyst has seen an uptick in bitcoin exchange-traded fund outflows from Europe. This change in the market, according to CoinShares Research Associate Luke Nolan, exemplifies a pattern in which American institutional traders are presumably shifting their focus to the newly authorized spot bitcoin ETFs.

Lowered costs and recognition of the brands seem to be important factors in attracting investors so far, with BlackRock and Fidelity pulling in the majority of the inflows since the start.

Shift of Focus

Bitcoin ETPs in Europe have seen a large withdrawal. Many American institutions used European ETPs for almost risk-free basis transactions before many spot bitcoin ETFs were approved. 

According to Nolan, these financial institutions may find it more convenient or cost-effective to perform the identical base transactions domestically now that the new U.S. products have been approved. Institutional investors in the United States may engage in what Nolan calls “basis trades” with little or no risk.

To ensure they could complete the contract and benefit from the basis difference—the premium over the underlying asset price that the futures price holds—investors in the US were shorting bitcoin futures while simultaneously purchasing the underlying asset via European ETPs. But now there’s an easier method for them to do it locally with spot bitcoin ETFs, Nolan noted.

The basis is the spread between an asset’s cash or spot price and its futures price for a given contract in futures trading. According to BitMEX Research’s data, since the debut of spot bitcoin ETFs last week, there has been a significant outflow of capital from the four biggest European bitcoin ETPs.

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