Bitcoin ETFs have experienced a surge in inflows recently, with U.S. spot Bitcoin ETFs attracting about $2.6 billion in capital over a three-week period ending on October 2, 2026. Despite this positive trend, Bitcoin remains roughly 32% below its peak from October 2025. The inflows are partly driven by institutional investors engaging in two key trades: the basis trade and the debasement trade.
In the basis trade, hedge funds purchase Bitcoin ETF shares while simultaneously selling Bitcoin futures contracts for future delivery at higher prices. This strategy allows them to profit from the price gap as it narrows, regardless of Bitcoin's overall price movement. According to CoinShares' James Butterfill, the basis trade currently offers an attractive yield of 6%. However, these inflows can be volatile, as capital tends to move out when the price spread between ETFs and futures contracts becomes too small.
On-chain data reveals that large private wallets, holding between 100 and 1,000 BTC, have been significant buyers of Bitcoin. From mid-July to late September 2026, these wallets added 113,950 BTC. This activity is likely motivated by the debasement trade, a strategy that bets on the erosion of the U.S. dollar's value due to heavy government borrowing or money printing. The debasement trade gained momentum in mid-August 2026 when the Treasury Department announced increased buybacks of long-dated sovereign debt, leading to a 35% rise in Bitcoin's value by early October.
While Bitcoin ETF inflows are currently strong, the driving forces behind these inflows, large institutional investors and their specific trading strategies, could lead to accelerated inflows or outflows depending on market conditions and investor sentiment.