A $1.26 billion block sale of BlackRock’s iShares Bitcoin Trust (IBIT) this week could have been driven by a large investor seeking a quick exit from bitcoin exposure rather than the unwinding of a common hedge-fund trading strategy.
This is according to an analysis published by the crypto investment company NYDIG.
The transaction took place on May 26, with 29.21 million IBIT shares changing hands off-exchange at $43.16 per share. The deal was executed at a discount of $1.01 to IBIT’s market price of $44.17 at the time, representing a 2.3% concession and approximately $29.5 million in execution costs.
NYDIG said the size of the discount suggests the seller prioritized security and speed over maximizing price. The trade was reported through the FINRA/Nasdaq TRF Carteret facility, which is commonly used for privately negotiated over-the-counter transactions.
Some market participants had speculated that the block could have been tied to a bitcoin basis trade, where investors hold spot bitcoin exposure while shorting futures contracts.
NYDIG rejected this explanation, arguing that the discount would have significantly reduced the strategy’s expected return.
The firm also pointed to activity in CME bitcoin futures. The IBIT position represented exposure equal to about 3,700 CME bitcoin futures contracts.
Even so, only 91 contracts were traded in the minute the block was executed, with no unusual increase 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 all weigh against the view that the transaction represented a simultaneous settlement of the underlying trade,” wrote NYDIG’s global head of research, Greg Cipolaro.
The selloff came as U.S. spot bitcoin ETFs see sustained outflows. According to SoSoValue data, the funds recorded daily net outflows on each trading day from May 15 to May 29. Total assets across the category fell from $107.75 billion on May 14 to $94.17 billion on May 29. Meanwhile, the bitcoin price fell 16% this year, while most other assets, such as crypto.
Read more: Bitcoin falls to 13th largest asset as capital flees to artificial intelligence and precious metals
Hard 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 each disclosed IBIT investor in recent 13F filings, making identification difficult.
The firm said public data cannot determine whether the selloff 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 sustained outflows and as the price of bitcoin remains below $80,000.
