Bitcoin Price Could Drop to $70K Amid ETF Outflows, Says Arthur Hayes

Highlights:

• Arthur Hayes forecasted that BTC could drop sharply amid hedge fund outflows.
• Hedge funds using basis trades might trigger a chain reaction of forced selling.
• On Monday, spot Bitcoin ETFs face a $517 million outflow, marking the fifth consecutive day of withdrawals.

In a recent post on X, Arthur Hayes, co-founder of the crypto exchange BitMEX, predicted that the price of Bitcoin (BTC) could fall to $70,000. He warned that “goblin town” is coming. Hayes said large outflows could happen from Bitcoin ETFs like BlackRock’s iShares Bitcoin Trust (IBIT).

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Hayes pointed to the actions of hedge funds behind the prediction. Many IBIT holders are hedge funds that went long on ETFs while betting against Bitcoin futures on the Chicago Mercantile Exchange (CME). This approach is called “basis trade,” which helps them earn stable profits with less risk, and their returns are often better than what they would get from short-term U.S. government bonds.

Hayes explained that if the “basis spread” drops along with Bitcoin’s price, these funds will sell IBIT and repurchase CME futures. These funds are currently in profit. Since the basis spread is close to Treasury yields, they will sell during US hours to secure gains. This selling could push Bitcoin back to $70,000, he said. 

Large hedge fund exits trigger a chain reaction of selling pressure. More selling leads to lower prices, forcing other funds to sell as well. This selling pressure makes the decline even worse.

#Bitcoin goblin town incoming:
Lots of $IBIT holders are hedge funds that went long ETF short CME future to earn a yield greater than where they fund, short term US treasuries.

If that basis drops as $BTC falls, then these funds will sell $IBIT and buy back CME futures.

These… pic.twitter.com/3PskTxrBPR

— Arthur Hayes (@CryptoHayes) February 24, 2025

Moreover, Markus Thielen from 10x Research said about 55% of spot Bitcoin ETF investors use arbitrage strategies. They buy spot Bitcoin through ETFs and short Bitcoin futures to profit from price differences. The remaining 44% of inflows are for long-term investments.

#Bitcoin & @MicroStrategy: The New Favorite Assets for Hedge Funds@BlackRock IBIT, MicroStrategy – what we know …

👇1-21) Although Bitcoin ETFs have attracted $38.6 billion in net inflows since their January 2024 launch, our analysis suggests that only $17.5 billion (44%)… pic.twitter.com/7Bf95P9NpX

— 10x Research (@10x_Research) February 23, 2025

Spot Bitcoin ETFs See Massive $517 Million in Outflows

Meanwhile, outflows from spot ETFs in the United States are rising. On February 24, spot Bitcoin ETFs recorded their largest seven-week outflow, totaling $517 million. This marked the fifth straight trading day of continuous outflows. HODL15Capital reported a $159 million outflow from BlackRock’s fund, while Fidelity’s Wise Origin Bitcoin Fund faced a $247 million withdrawal. Farside Investors also noted outflows from Bitwise, Invesco, VanEck, WisdomTree, and Grayscale funds.

Bitcoin Risks Sharp Drop as Key Support Level Weakens

Also, Crypto analyst Ali Martinez warns that if Bitcoin fails to hold the $93,700 support level, it could drop to $75,600. This caution comes as traders watch Bitcoin’s price amid market volatility and economic uncertainty. At press time, BTC is down 7.56%, trading at $89,203.

If #Bitcoin $BTC fails to hold $93,700 as support, the next key level to watch is $75,600! pic.twitter.com/bCfwEHhlYJ

— Ali (@ali_charts) February 24, 2025

Moreover, Bitfinex analysts said in a Feb. 24 report that Bitcoin is at a “critical point” after trading between $91,000 and $102,000 for nearly 90 days. This long consolidation shows weak momentum for a strong breakout across major cryptocurrencies. “The momentum required for a sustained breakout has been lacking, and this has led to a period of contraction and consolidation across almost all major crypto assets,” the analysts said. With external pressures like tariffs and lower consumer sentiment, Bitcoin remains prone to sudden drops.

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