Bitcoin ETF Flows Trail Price Moves, DWF Study Finds

Bitcoin ETF flows track recent price moves more closely than subsequent ones, according to DWF Labs research published October 22. The findings challenge a familiar shortcut: treating a large daily inflow as a forecast. TL;DR: DWF finds Bitcoin ETF flows track past returns more closely than future returns. The study examined 694 trading days through October 16, using aggregate U.S. spot ETF flows from Farside and Coinbase BTC-USD prices. It reported a correlation of 0.54 with the preceding five-day return, compared with 0.03 for the following five days. The distinction is between observing demand and forecasting returns. Two series moving together does not show which caused the movement. A relationship with earlier prices may be useful for interpreting investor behavior without supplying a reliable rule for what happens next. An ETF Purchase Can Have A Hedge Attached Interpreting the economic motive behind a flow requires more than its direction. CME Group’s explanation of crypto basis trading describes how an investor can buy a spot ETF and sell futures at the same time when futures trade at a premium. The position aims to capture the difference between the two prices as they conv...