Bitcoin ETF Flows, Open Interest and Funding: Reading the Demand Tape
ETF creations show cash demand. Open interest and funding show borrowed demand. The letter reads both to tell a healthy move from a squeeze that can reverse.
Two kinds of buying move Bitcoin. Cash demand shows up in US spot Bitcoin ETF creations. Borrowed demand shows up in perpetual futures: open interest, funding rates and liquidations. A rally built on the first tends to hold; a rally built on the second can reverse as fast as it came.
The letter tracks daily spot ETF flows from Farside's table and venue open interest and funding from exchanges such as OKX. In September 2026, for example, ETFs swung from about −$450M and −$296M in outflows to seven straight sessions of inflows worth about $3B, peaking near $999M in a day and then slowing each session. Price rejected at $87k while flows were still positive. Positive and slowing can be true at the same time.
The desk avoids slogans like "inflows before crashes are bearish". The useful question is the transmission: who the marginal seller is, whether creations are absorbed, and whether leverage rebuilt faster than cash came in. A drop in open interest with cooling funding after a squeeze is a reset; the same drop with support levels failing and liquidations rising is the start of a cascade. From a distance they look alike, which is why the letter waits for daily closes.
The issues below walk through each turn in the tape, from the missing bid in mid-September to the squeeze to $87k and the deleveraging wave that followed.
