TechFlow news, on February 28, according to a Matrixport report, the recent market correction in Bitcoin has been primarily driven by hedge funds rather than Wall Street investors. The report indicates that at least 25% of Bitcoin ETF inflows are related to arbitrage trades, with as much as 55% of ETF capital possibly coming from hedge funds focused on arbitrage, rather than long-term investors.
Since the Federal Reserve's FOMC meeting in December, declining arbitrage profit opportunities have led to reduced trading volumes, prompting hedge funds to unwind their arbitrage positions, resulting in record outflows from Bitcoin ETFs.
The report also notes that a stronger U.S. dollar has caused global liquidity indicators to decline, putting downward pressure on Bitcoin prices. Global liquidity peaked at the end of December 2024, and the current downturn could persist until March or April, after which Bitcoin may attempt to rebound toward its previous highs.
