--- title: "Galaxy Report Finds Nine Hedge Funds Drove Bulk of Bitcoin ETF Outflows" description: "Millennium, Goldman Sachs, and seven peers trimmed 68,000 BTC in spot ETF exposure as shrinking basis yields eroded cash-and-carry returns." url: https://basisdesk.news/news/galaxy-nine-hedge-funds-drove-bitcoin-etf-outflows published: 2026-10-28T16:26:42.850Z modified: 2026-10-28T16:26:42.850Z section: Institutions & ETFs author: Basis Desk Newsroom (AI-generated, source-verified) sentiment: neutral tickers: [BTC] tags: [bitcoin-etf, hedge-funds, basis-trade, cme-futures, sovereign-wealth] license: Quote with attribution to Basis Desk (basisdesk.news). Not financial advice. --- # Galaxy Report Finds Nine Hedge Funds Drove Bulk of Bitcoin ETF Outflows Millennium, Goldman Sachs, and seven peers trimmed 68,000 BTC in spot ETF exposure as shrinking basis yields eroded cash-and-carry returns. ## At a glance - **What happened:** Galaxy Research found nine hedge funds and banks sold 68,000 BTC from spot ETFs between September 2025 and June 2026, while sovereign funds bought. - **Why it matters:** The exits were caused by CME futures basis yield compressing to 0.6% over cash rather than fundamental bearishness on Bitcoin. - **Who is affected:** Institutional 13F filers, crypto arbitrage hedge funds, and US spot Bitcoin ETF issuers. - **What's next:** Upcoming 13F disclosures covering the third quarter of 2026. - **Primary source:** [Wall Street’s Fast Money Fled Bitcoin ETFs, Sovereign Funds Stepped In](https://decrypt.co/382059/wall-street-fast-money-fled-bitcoin-etfs-sovereign-funds) — decrypt.co ## Key points - Nine major financial institutions cut 68,000 BTC in spot Bitcoin ETF holdings between September 2025 and June 2026. - The 2,200 other 13F filers added 20,000 BTC over the same period, led by sovereign wealth funds and wealth managers. - The front-month CME futures basis fell to 0.6 points over Treasury bills, compressing carry-trade margins to 1.5% after costs. ## Editorial remark - **Context:** Institutional cash-and-carry traders expanded rapidly into spot Bitcoin ETFs following their 2024 launch, seeking high-yielding delta-neutral basis spreads over CME futures. - **Impact:** Exiting arbitrage funds handed structural supply over to directional, long-term allocators like sovereign wealth funds, de-leveraging the spot-futures market link. - **Watch:** Third-quarter 13F filings due in November to show whether wealth platforms and sovereign entities expanded purchases after the June low. A small cluster of hedge funds and investment banks accounted for the majority of institutional selling in US spot Bitcoin exchange-traded funds during the 2026 market downturn, according to a report published on Monday by Galaxy Research [1]. Between the end of September 2025 and June 2026, institutional holders filing quarterly 13F forms with the SEC reduced their spot ETF holdings by 14%, falling from 355,000 BTC to 307,000 BTC [1]. Nine institutions drove the entirety of that net decline: Millennium Management, Brevan Howard, Goldman Sachs, Capula Management, Farallon Capital, D.E. Shaw, Schonfeld Strategic Advisors, Symmetry Investments, and Tudor Investment [1]. Together, the nine firms shed 68,000 BTC in ETF exposure—reducing their positions by between 29% and 100%—while the remaining 2,200 filers absorbed roughly 20,000 BTC [1]. Buyers stepping into the asset class included Morgan Stanley's wealth management arm, Mubadala, and the Abu Dhabi Investment Council [1]. ## Vanishing Basis Margins Squeeze Arbitrage Galaxy head of firmwide research Alex Thorn attributed the institutional departures to deteriorating arbitrage yields rather than negative sentiment toward $BTC [1]. Many multi-strategy desks were engaged in a cash-and-carry trade: buying spot Bitcoin ETF shares while shorting CME Bitcoin futures to capture the spread between the two [1]. That spread has tightened sharply. The front-month futures basis averaged 7.9% annualized in the 30 days preceding Bitcoin's record peak, sitting 3.9 percentage points above three-month Treasury bills [1]. In the 30 days through Oct. 21, the basis shrank to 4.8%, just 0.6 percentage points above cash yields [1]. After subtracting financing, rolling expenses, and margin requirements, the strategy nets approximately 1.5 percentage points above cash, which Thorn concluded fails to justify the trade's tail risk [1]. Commodity Futures Trading Commission data shows a matching contraction, with leveraged funds cutting net-short futures positioning by 57% alongside an equivalent drop in asset managers' net longs [1]. At the time of writing, $BTC trades around $80,380. Despite the hedge fund unwind, overall spot ETF reserves proved resilient, declining only 11% from their October 2025 peak to their July low while underlying spot prices halved [1]. Spot funds have since accumulated 87,000 BTC from their June trough, signaling renewed directional accumulation alongside recent periods where [US spot Bitcoin ETFs drew over $1B in three days](https://basisdesk.news/news/us-spot-bitcoin-etfs-pull-one-billion-inflows) [1]. ## Sources 1. [Wall Street’s Fast Money Fled Bitcoin ETFs, Sovereign Funds Stepped In](https://decrypt.co/382059/wall-street-fast-money-fled-bitcoin-etfs-sovereign-funds) — decrypt.co, 2026-10-28 --- Basis Desk Newsroom · AI-generated, source-verified · https://basisdesk.news/about/how-we-use-ai