BEARISH 📉 : BlackRock’s IBIT Hedging Triggers Bitcoin Sell-Off, Says Hayes

Arthur Hayes, co-founder of BitMEX, identifies hedging associated with BlackRock's iShares Bitcoin Trust (IBIT) as a key factor in the recent Bitcoin sell-off.

Dealer hedging tied to IBIT and similar products can trigger significant selling when market conditions shift.
Banks and dealers managing these structured products adjust their hedges swiftly, potentially leading to rapid price drops, especially in low liquidity environments.

Recent market activity showed a sharp decline in Bitcoin prices followed by a partial recovery:

Bitcoin fell to approximately $68,500, marking a 16% decrease over seven days.
Increased trade volumes indicate hedging flows and quick rebalancing were influential.
Additional factors like macroeconomic news and trader positioning also played roles.

Dealers bear risk from complex products, which can be transferred back to the market through hedging, creating potential chain reactions affecting traders.

Regulators, including US President Donald Trump's economic team, are monitoring the impact of spot ETFs on crypto markets. The debate continues on whether ETFs stabilize or stress the market.

This situation highlights how new financial structures create contagion channels, with large players possibly contributing to unpredictable market mechanics.

Hayes' theory links hedging flows to the crash, aligning with observed market signals, but other elements like macro shifts and profit-taking likely contributed. Traders will continue to monitor these dynamics closely.