Billions of dollars have flowed into the U.S.-listed spot bitcoin BTC exchange-traded funds (ETFs) in recent weeks, as the cryptocurrency chalked out a sharp recovery rally from $75,000 to $100,000.

Most of the investment is likely driven by bold, strategic bullish directional bets rather than market-neutral arbitrage plays, data analysis suggests.

The 11 spot ETFs drew in $2.97 billion in investor money in April, with an additional $2.64 billion flowing in so far this month, according to data source SoSoValue. That has boosted the net inflow since inception in January 2024 to over $41 billion.

Institutions have historically used these ETFs to set up non-directional arbitrage plays to profit from price discrepancies between futures and spot bitcoin markets. The so-called cash and carry arbitrage involves buying ETFs while simultaneously selling the CME futures to pocket the futures premium while bypassing price direction risks.

But inflows since early April seem driven by bullish directional bets, not arbitrage plays. That’s reflected in the Commitment of Traders (COT) report published by the Commodities Futures Trading Commission (CFTC) every week.

The data shows leveraged funds, typically hedge funds and various types of money managers, including registered commodity trading advisors, have trimmed their net shorts to 14,139 contracts from 17,141 contracts in early April, according to data tracked by Tradingster.

The number of shorts would have risen if carry trades had primarily driven the net inflows.

«CFTC data shows leveraged funds didn’t significantly increase short positions, indicating most flows were directional bets, not arbitrage,» Imran Lakha, founder of Options Insight, in a blog post published on Deribit.

The shift in the nature of inflows in the ETFs suggests large players are increasingly using the ETFs to express a clear market outlook on bitcoin’s future direction.

Bitcoin last changed hands at $102,700 at press time, according to CoinDesk data.

A 26-year-old man from Alabama has been sentenced to more than a year in prison for his role in a social media hack that briefly sent the price of bitcoin BTC soaring.

Eric Council Jr. of Huntsville pleaded guilty to charges tied to the January 2024 hack of the U.S. Securities and Exchange Commission’s X account, according to a U.S. Department of Justice press release.

Posing as a telecom customer using a fraudulent ID, Council used a SIM-swap technique to hijack a phone number tied to the SEC’s account. His co-conspirators then used it to falsely post that the agency had approved spot bitcoin exchange-traded funds (ETFs), a long-awaited regulatory milestone.

Within minutes, the price of bitcoin surged by more than $1,000. It crashed soon after, losing more than $2,000 in value once the post was revealed as fake. The SEC did later that month approve the launch of spot bitcoin ETFs.

Authorities say Council was paid in bitcoin for his role. He will serve 14 months in prison followed by three years of supervised release.

Federal prosecutors called the attack a calculated attempt to manipulate financial markets. “The deliberate takeover of a federal agency’s official communications platform was a calculated criminal act meant to deceive the public and manipulate financial markets,” said Acting FBI Assistant Director Darren Cox. “By spreading false information to influence the markets, Council attempted to erode public trust and exploit the financial system”

CoinDesk hosted its annual Consensus conference in Toronto this week. It was busy, to put it mildly.

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The narrative

It’s been a hectic week, watching the Senate’s ongoing negotiations over its stablecoin bill, trying to track other legislation and the courts (more on that later perhaps) and just generally meeting folks here in Toronto.

Why it matters

Here’s a selection of CoinDesk’s coverage from the past week.

Breaking it down

• New York Finance Watchdog Harris Says State’s BitLicense Is Still a Global Standard
• Anchorage Digital CEO Calls ‘Bullshit’ on Report of DHS Probe
• Cantor Fitzgerald Chairman Brandon Lutnick Says He Personally Checked Tether’s Reserves
• Trump Still on Track to Sign Crypto Legislation by August, White House’s Bo Hines Says
• Banks Exploring Stablecoin Amid Fears of Losing Market Share, BitGo Executive Says
• World Liberty’s Stablecoin Now Available on Multiple Networks Via Chainlink
• Trump’s Memecoin, Crypto Stake Make Legislating ‘More Complicated’: Rep. French Hill
• Eric Trump Says He Got Into Crypto Amid Political Attack, Calls Bitcoin ‘Digital Gold’
• PayPal Crypto Head Says Banks Are Needed to Unlock Full Stablecoin Potential
• Dave Portnoy Says Meme Coins Are ‘Gambling’ and Not Built to Last
• Kevin O’Leary: ‘I Want More Regulation, And I Want It Now’
• ‘Really Great Example’: Coinbase Praised for Hack Response Amid $400M Crisis
• Stablecoins Bring ‘Meaningful Innovation for Global Payments,’ Ripple Exec Says

Stories you may have missed

• Coinbase Could Pay Customers Up to $400M for Data Breach: Crypto exchange Coinbase said it suffered a cybersecurity breach wherein malicious actors were able to secure customer names, addresses, phone numbers, social security numbers and bank account details — some of which were masked — by bribing overseas employees. These actors allegedly scammed customers using their personal details, and Coinbase said it would reimburse customers, expecting to pay anywhere between $180 million and $400 million.
• Movement Labs Secretly Promised Advisers Millions in Tokens, Leaked Documents Show: Another scoop by CoinDesk’s Sam Kessler reveals that Movement Labs promised to send advisers token allotments, though Movement said those agreements were nonbinding.
• French Minister Agrees on Measures to Protect Crypto Professionals After Kidnappings: Attempted kidnappings of people with crypto or whose loved ones have crypto have become very common recently. French Interior Minister Bruno Retailleau agreed to heightened security measures.
• Senate’s New Stablecoin Draft Doesn’t Target Trump’s Crypto, Tweaks Big-Tech Approach: The U.S. Senate has new legislative text for its stablecoin bill, with a cloture vote scheduled for Monday. Cloture is the motion to proceed to debate and needs 60 votes in favor to pass, meaning lawmakers will need bipartisan support to advance the bill.
• U.S. Senate’s Stablecoin Push Still Alive as Bill May Return to Floor: Sources: CoinDesk reported earlier this week that new legislative text for the Senate’s stablecoin bill was coming and there would be a vote soon.
• Telegram Shuts Down ‘Largest Illicit Online Marketplace’ After Elliptic’s Insights: Telegram has shut down Huione Guarantee (which renamed itself Haowang Guarantee), citing research firm Elliptic’s work identifying over $27 billion in stablecoin transactions.
• DOJ Will Still Pursue Roman Storm Case Despite Blanche Memo, Prosecutors Say: The Department of Justice said it had reviewed its prosecution of Roman Storm to ensure it is in line with Deputy Attorney General Todd Blanche’s April memo on «regulation by prosecution» and would proceed on most of its charges against the Tornado Cash developer.
• SEC Is Probing Coinbase Over User Number Misstatement Concern: Coinbase is having a heck of a week.
• FTX to Pay Over $5B to Creditors as Bankrupt Estate Gears Up for Distribution: FTX creditors will start seeing payouts from the exchange’s bankruptcy estate on May 30.
• DOJ Charges 12 With $263M Crypto Theft Linked to Genesis Creditor: The U.S. Department of Justice charged 12 people for allegedly stealing over $263 million, tied to a previous investigation which saw scammers steal north of $243 million from a creditor to bankrupt crypto trading firm Genesis.
• Ripple-SEC Bid for XRP Settlement Rejected by Judge Citing ‘Procedural Flaws’: The federal judge overseeing the Securities and Exchange Commission’s long-running case against Ripple rejected their proposed settlement, citing jurisdiction and procedural concerns.
• Trump-tied World Liberty Financial Rebuffs U.S. Senator’s Probe: World Liberty Financial pushed back against Senator Richard Blumenthal’s inquiry about its operations.
• CFTC Commissioner Mersinger to Be CEO at Blockchain Association: Commissioner Summer Mersinger will leave the CFTC on May 30 and become the next CEO of the Blockchain Association next month.
• CFTC’s Pham Said to Plot Exit, Agency May Be Left Without a Party Majority: Acting Chairman Caroline Pham has told people she intends to depart, perhaps as soon as former Commissioner Brian Quintenz is confirmed by the Senate to become the permanent chair of the agency, CoinDesk’s Jesse Hamilton reported.
• CFTC’s Christy Goldsmith Romero to Leave Agency at End of Month: Commissioner Christy Goldsmith Romero said she would depart on May 31.

This week

Monday

• 17:00 UTC (1:00 p.m. ET) The SEC held the latest of its crypto roundtables, this time focused on tokenization.

Wednesday

• CoinDesk’s Consensus Toronto conference started.

Elsewhere:

• (Variety) Warner Bros. Discovery will rebrand its Max streaming service as HBO Max, after previously rebranding HBO Max as Max. Dream job: Person who rebrands stuff?
• (The New York Times) Buyers of the TRUMP memecoin told the Times that they explicitly want to try and influence policy with the president.
• (The New York Times) A company with a handful of employees that makes videos for TikTok said it planned to buy up to $300 million of TRUMP memecoin tokens. It registered zero revenue last year.

If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Bluesky @nikhileshde.bsky.social.

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See ya’ll next week!