A $1.26 billion block sale of BlackRock’s iShares Bitcoin Trust (IBIT) this week might have been driven by a large investor seeking a rapid exit from bitcoin exposure rather than the unwinding of a common hedge-fund trading strategy.
That’s according to an analysis published by crypto investment firm NYDIG.
The transaction took place on May 26, when 29.21 million IBIT shares changed hands off-exchange at $43.16 per share. The trade was executed at a $1.01 discount to IBIT’s market price of $44.17 at the time, representing a 2.3% concession and roughly $29.5 million in execution costs.
NYDIG said the size of the discount suggests the seller prioritized certainty and speed over maximizing price. The trade was reported through the FINRA/Nasdaq TRF Carteret facility, which is commonly used for privately negotiated off-exchange transactions.
Some market participants had speculated the block could have been tied to a bitcoin basis trade, in which investors hold spot bitcoin exposure while shorting futures contracts.
NYDIG rejected that explanation, arguing that the discount would have significantly reduced the strategy’s expected returns.
The firm also pointed to activity in CME bitcoin futures. The IBIT position represented exposure equivalent to roughly 3,700 CME bitcoin futures contracts.
Yet only 91 contracts traded during the minute in which the block was executed, with no unusual spike in futures volume.
“The size of the trade, the 2.3% execution discount, the absence of corresponding CME futures activity, and the limited universe of potential sellers collectively weigh against the view that the transaction represented a contemporaneous basis-trade unwind,” NYDIG’s global head of research, Greg Cipolaro, wrote.
The sale came as U.S. spot bitcoin ETFs see sustained outflows. According to SoSoValue data, the funds recorded daily net outflows on every trading day from May 15 through May 29. Total assets across the category fell from $107.75 billion on May 14 to $94.17 billion by May 29. Meanwhile, the bitcoin price fell 16% this year, while most other assets, such as equities and commodities, have surged as capital continues to flow out of crypto.
Read more: Bitcoin drops to 13th largest asset as capital flees to AI and precious metals
Difficult to identify
While IBIT recorded about $720 million in net redemptions across May 26 and May 27, NYDIG said ETF flow data cannot be used to directly identify the seller or link specific redemptions to the block transaction.
NYDIG noted that the position exceeded the reported holdings of every disclosed IBIT investor in recent 13F filings, making identification difficult.
The firm said public data cannot determine whether the sale was driven by investor redemptions, risk-management constraints or a discretionary decision to reduce bitcoin exposure.
Still, NYDIG said the transaction stands out because a large holder chose to accept a significant discount to exit a bitcoin-linked position worth more than $1 billion during a period of persistent outflows and as the price of bitcoin remains below $80,000.
Leave a comment