U.S.-listed spot bitcoin ETFs have attracted about $1.4 billion in inflows over the past five days, even as bitcoin’s price has remained largely unchanged. Bitfinex analysts argue that ETF inflows can be misread as immediate spot demand because authorized participants often create and short ETF shares before buying the underlying bitcoin, delaying real spot-market purchases. The shares are created and redeemed by authorized participants (APs), specialized financial institutions such as large banks, market makers, or broker‑dealers. When demand for the ETF rises, its price can trade above the fund’s net asset value, prompting APs to create new shares, sell them to buyers, and narrow the price gap.
Often, APs sell shares they do not yet own – a process known as shorting. In general markets, short‑selling rules require most investors to borrow shares first, but regulators allow APs to short ETF shares almost immediately and buy corresponding bitcoin hours later or until the next business day, depending on whether creations are done in cash or in-kind. As a result, ETF demand can rise even while actual BTC buying in the spot market is delayed. By the time those actual BTC purchases take place, they are often offset by other selling pressure elsewhere in the market, which can help mitigate the bullish impact on price and keep Bitcoin trading in a tighter range.
This likely helps explain the recent surge in inflows alongside the lackluster price action, according to Bitfinex’s analysts. An ETF is a pooled investment vehicle that holds assets such as bitcoin and issues shares that trade on stock exchanges like regular equities. The fund is designed to track the value of the underlying closely, and each share represents a claim to the underlying holdings. A total of 11 spot ETFs debuted in the U.S. in January 2024, and since then these funds have cumulatively registered inflows worth over $55 billion.
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