A significant sale of BlackRock’s iShares Bitcoin Trust (IBIT), totaling $1.26 billion, appears to have been executed by a large investor looking for a swift exit from bitcoin exposure rather than reflecting a typical hedge fund strategy unwinding.
This insight comes from an assessment conducted by the crypto investment firm NYDIG.
The transaction occurred on May 26, when 29.21 million IBIT shares were traded off-exchange at a price of $43.16 per share. This price was $1.01 below the market price of $44.17 at that time, indicating a 2.3% discount, which translates to approximately $29.5 million in execution costs.
Large BIT block trade. (NYDIG)According to NYDIG, the substantial discount indicates that the seller prioritized speed and certainty over achieving the highest possible price. The trade was processed through the FINRA/Nasdaq TRF Carteret facility, a common venue for privately negotiated off-exchange trades.
While some market observers speculated that the trade might be related to a bitcoin basis trade, where investors maintain spot bitcoin exposure while shorting futures, NYDIG dismissed this theory, noting that the discount would significantly diminish the expected returns of such a strategy.
Furthermore, NYDIG highlighted the trading activity in CME bitcoin futures. The IBIT position corresponded to roughly 3,700 CME bitcoin futures contracts. However, only 91 contracts were traded during the minute the block transaction occurred, with no notable spike in futures volume.
Greg Cipolaro, NYDIG’s global head of research, stated, “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.”
This sale coincided with a period of ongoing outflows from U.S. spot bitcoin ETFs. Data from SoSoValue indicates that these funds experienced daily net outflows from May 15 to May 29. In total, assets in this category decreased from $107.75 billion on May 14 to $94.17 billion by May 29. Meanwhile, bitcoin's price has dropped 16% this year, while most other asset classes, including equities and commodities, have seen gains as capital exits the crypto market.
Read more: Bitcoin drops to 13th largest asset as capital flees to AI and precious metals
Difficult to trace the seller
Despite IBIT reporting approximately $720 million in net redemptions on May 26 and 27, NYDIG noted that ETF flow data does not allow for direct identification of the seller or for linking specific redemptions to the block transaction.
NYDIG observed that the position surpassed the reported holdings of every disclosed IBIT investor in recent 13F filings, complicating identification efforts.
The firm stated that publicly available data cannot clarify whether the sale was prompted by investor redemptions, risk management needs, or a strategic decision to decrease bitcoin exposure.
Nonetheless, NYDIG pointed out that the transaction is noteworthy because a significant holder opted to accept a considerable discount to divest from a bitcoin-related position exceeding $1 billion amidst ongoing outflows and while bitcoin prices remain below $80,000.
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