Hedge funds that once fueled the U.S. Bitcoin ETF boom are now rapidly withdrawing, with total Bitcoin ETF allocations by major hedge fund holders dropping 28% from Q3 to Q4 2025, according to CF Benchmarks data. Gabe Selby, head of research, noted that the past two quarters have been marked by hedge funds de-risking, with October's market peak triggering systematic sell-offs. The previously popular Bitcoin basis trade, involving buying spot ETFs and shorting CME futures, has seen its annualized returns fall to approximately 4%, down from double-digit levels, as reported by Amberdata. Meanwhile, investment advisory firms have increased their holdings in IBIT, with a 145% year-over-year growth in positions over the past year.