Hedge funds, previously the main drivers of growth in US cryptocurrency ETFs, have begun exiting assets en masse, Bloomberg reports.
This has increased pressure on Bitcoin, which has already lost almost 50% of its value from its all-time highs.
According to CF Benchmarks, the combined holdings of the largest hedge funds in Bitcoin fell by 28% in the fourth quarter of 2025. A prime example is Brevan Howard, which became the largest seller of iShares Bitcoin Trust (BlackRock). The fund reduced its stake by 86%, reducing the value of its position from $2.4 billion to $275 million.
Analysts identify two main reasons for the exodus of speculative capital. First, Bitcoin has ceased to function as a hedge against inflation and macroeconomic risks, falling in sync with the stock market.
Secondly, the popular basis trading strategy (buying a spot ETF and selling futures) has ceased to generate super profits. While returns previously reached double-digit figures, by February 2026 they had fallen to 4% per annum due to market oversaturation.
Long-term investors are replacing the "quick money" strategy, taking advantage of the dip to buy. Abu Dhabi, for example, increased its position in a Bitcoin ETF by 46% at the end of last year.
"Speculative capital has retreated, and a more solid ownership base is forming in its place," concluded Gabe Selby, head of research at CF Benchmarks.