According to Pal’s claim, the largest investors in US Bitcoin ETFs are hedge funds that manage funds of various institutional and individual investors. These funds own spot Bitcoin ETF holdings, which account for nearly two-thirds of net inflows since Jan. 11, or $10.26 billion of the $15.42 billion.

Data reveals that Millennium Management, the major player in these funds, alone owns $1.94 billion worth of Bitcoin ETF shares. Millennium Management distributed risk by spreading its investments across different funds such as Bitwise, Grayscale, Fidelity, BlackRock, ARK and 21Shares.

However, Pal’s claim is controversial. Some experts emphasize that excluding Grayscale Bitcoin Trust (GBTC), the total management assets of the 10 US Bitcoin ETFs are $42 billion, and short interest on CME should also be taken into account. While figures like crypto trader Joseph B. acknowledge that recent inflows may be affected by arbitrage trading, they argue that this impact accounts for less than 15% of the total flow.

So why does Pal make such claims? Pal argues that the activities of these funds are mostly focused on arbitrage trading, that is, they try to profit from short-term price differences. According to him, these funds are not “direction-setting” investors who do not invest based on Bitcoin’s long-term price movements. This view is also supported by Deep Q Digital CEO Carlos Zendejas. Zendejas states that the majority of the funds in question are not “buy and hold” investors, and this is clearly seen when he examines the list.

So, what is arbitrage trading and why is it important? In arbitrage trading, price differences of an asset in different markets are taken advantage of. For example, if the Bitcoin price is slightly higher in an ETF, an arbitrageur can make a quick profit by buying Bitcoin and selling it in the ETF unit at the higher price. Although these transactions increase efficiency in the market, arbitrage opportunities are generally short-lived due to high transaction volumes.

If Pal’s claim is true, it means that retail investors have not yet entered Bitcoin ETFs en masse. This may indicate that the market is not yet mature and there are some obstacles to Bitcoin adoption. However, other experts emphasize that it is also important to take into account factors such as total management assets and CME short interest.

As a result, it is not yet clear who the main actors behind investment in Bitcoin ETFs are and their true motivations. Although the role of arbitrage trading is controversial, it is evident that market dynamics may change significantly in the future with the mass entry of retail investors. This may also affect Bitcoin’s long-term price performance.