This week’s $1.26 billion block sale in iShares Bitcoin Trust (IBIT), managed by the US-based giant asset manager BlackRock, attracted attention in the crypto market. It is stated that the sale may be related to the desire of a large investor to quickly exit his bitcoin position, rather than the termination of an ordinary hedge fund strategy.
What’s behind the big transaction?
The block sale took place on May 29, when 29.21 million IBIT shares changed hands over-the-counter at $43.16. This price was 2.3% below the current market value of $44.17 and brought about a cost of approximately $29.5 million. Details of the transaction were shared in the analysis of digital asset investment company NYDIG.
“The size of the transaction, the 2.3% price discount, the lack of a simultaneous movement in CME bitcoin futures, and the limited actors who can sell make this transaction different from a traditional arbitrage closing,” NYDIG said.
It is known that block transactions are generally made outside the exchange, by private agreement between the buyer and the seller. Such large transactions often stand out due to the need to quickly convert to cash or unusual portfolio management decisions.
Mini glossary: IBIT (iShares Bitcoin Trust) is the leading US spot bitcoin exchange fund (ETF), managed by BlackRock, offering investors direct access to bitcoin price action. It allows large investors to take and exit positions worth millions of dollars through this fund.
Why did arbitrage claims remain weak?
Some commentators in the market have suggested that the sell-off may be related to bitcoin-based arbitrage transactions. In this strategy, investors simultaneously buy spot bitcoin and take “short” positions in bitcoin futures contracts. However, according to NYDIG, selling at such a high price discount greatly reduces the return on arbitrage transactions, thus highlighting the weakness of the explanation.
The analysis also stated that the IBIT position corresponded to 3,700 CME bitcoin futures contracts. However, within the minute of the block transaction, only 91 contracts were traded in the futures markets and there was no unusual volume increase.
Sharp sell-off in the market and decreasing demand for crypto
Recently, consecutive outflows in spot bitcoin ETFs in the USA are noteworthy. Net outflow was recorded every day between May 15–29; Total assets decreased from approximately $107.75 billion to $94.17 billion. During the same period, the price of bitcoin has decreased by 16% since the beginning of the year. In contrast, traditional asset classes continue to rise and capital exiting crypto is shifting to other regions.
NYDIG stated that ETF flow data cannot be used to directly attribute specific sales, and the source of the block sale cannot be clarified with publicly available information.
According to the company’s data, the amount that changed hands in the sale exceeds the positions disclosed in the latest public IBIT investor statements. Due to this situation, it cannot be clearly determined which investor made the transaction.
NYDIG states that the reason for the sale may be based on very different reasons such as investors’ own risk management, fund outflow or simply reducing bitcoin exposure, and this cannot be understood from publicly available data.
What message does the sale send to the market?
The sale stands out both for its total size and for the fact that it was realized with a significant price discount. Market analysts find it remarkable that a large investor is willing to make a quick exit from a position worth more than $1 billion, in an environment where the price of bitcoin is moving below the $80,000 level and ETFs continue to make consecutive outflows.
