Galaxy finds nine firms cut Bitcoin ETF exposure by 68,000 BTC as carry trade weakened

Galaxy Research found that nine hedge funds and banks reduced exposure to U.S. spot Bitcoin ETFs by 68,000 BTC, roughly $5.4 billion at today's prices. Galaxy published the findings on Monday. The nine firms reduced individual positions by between 29% and 100%. The sellers were Millennium Management, Brevan Howard, Goldman Sachs, Capula Management, Farallon Capital, D.E. Shaw, Schonfeld Strategic Advisors, Symmetry Investments and Tudor Investment.

Galaxy found that institutions filing quarterly 13F reports with the SEC held spot ETF shares equivalent to 355,000 BTC at the end of September 2025. That date preceded Bitcoin's record high. Galaxy put those holdings at 307,000 BTC by June 2026, a decline of 48,000 BTC, or 14%. The remaining roughly 2,200 filers collectively increased exposure by about 20,000 BTC, worth roughly $1.6 billion. Morgan Stanley's wealth management arm, Abu Dhabi's Mubadala and the Abu Dhabi Investment Council were among the buyers. Advisers, family offices and individuals outside the 13F filing population reduced holdings by only 6.6% while Bitcoin's price declined 49%.

Galaxy head of firmwide research Alex Thorn said most sellers were executing a trading strategy rather than taking a directional position on Bitcoin. Many sellers paired purchases of spot ETF shares with short positions in CME Bitcoin futures to earn the basis, the difference between the prices. The front-month basis averaged an annualized 7.9% during the 30 days preceding Bitcoin's record high, exceeding three-month Treasury bill yields by 3.9 percentage points. During the 30 days through October 21, the basis averaged 4.8%, only 0.6 percentage points above Treasury bills. Galaxy estimated that fees, contract-rolling costs and margin leave the trade earning about 1.5 percentage points more than cash. Thorn attributed the multi-strategy trading desks' departure to those returns, not Bitcoin's price.

CFTC figures show that asset managers' net long CME Bitcoin futures position declined 57%, from 43,300 BTC during the week of Bitcoin's record high to 18,400 BTC. Leveraged funds' net short position, representing the futures component of the carry trade, contracted by the same proportion, from 71,400 BTC to 30,600 BTC. Open interest has declined 28% when measured in Bitcoin. Open interest has declined 51% when measured in dollars.

November and December futures offered rates of 6.3% to 6.5% at the October 21 close, about 2 percentage points above Treasury bills before costs. However, Thorn argued that the small premium inadequately compensates traders for tail risk. The basis reached an annualized negative 31% in December 2022.

Total spot ETF holdings declined only 11% between the October 2025 peak and the July trough while Bitcoin's price dropped 53%. The funds have acquired another 87,000 BTC since the June low. Galaxy characterized those additions as directional purchases rather than carry trades.

The ETFs lost nearly $1 billion over two weeks earlier this month. The ETFs subsequently recorded the strongest daily inflows in nearly a month on October 19, with BlackRock's IBIT accounting for all buying. A subsequent three-day inflow streak totaling $1 billion gave way to substantial outflows. ETF flows became positive again this week, with smaller inflows totaling roughly $286 million so far.

The 13F figures cover holdings through June and therefore exclude more recent changes. Galaxy disclosed that Galaxy holds Bitcoin.