A $1.26 billion block sale of BlackRock’s iShares Bitcoin Trust (IBIT) this week may 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 crypto investment firm NYDIG.
The transaction took place on May 26, when 29.21 million IBIT shares traded over-the-counter at a price of $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 approximately $29.5 million in execution costs.
NYDIG said the size of the discount suggests the seller prioritized certainty and speed over maximizing price. The transaction was reported through the FINRA/Nasdaq TRF Carteret system, which is commonly used for privately negotiated off-exchange transactions.
Some market participants had speculated that the block could have been linked to a bitcoin-backed transaction, in which investors hold spot exposure to bitcoin while shorting futures contracts.
NYDIG rejected this explanation, arguing that the discount would have significantly reduced the strategy’s expected returns.
The company also highlighted CME Bitcoin futures activity. The IBIT position represented exposure equivalent to approximately 3,700 CME Bitcoin futures contracts.
Yet only 91 contracts traded during the minute the block was executed, with no unusual spike in futures volume.
“The size of the transaction, the 2.3% execution discount, the lack of corresponding activity on CME futures, and the limited universe of potential sellers collectively weigh against the notion that the transaction represented a contemporary basis trade unwind,” wrote Greg Cipolaro, global head of research at NYDIG.
The sell-off took place as US spot Bitcoin ETFs experience sustained capital outflows. According to SoSoValue data, funds saw daily net outflows each trading day from May 15-29. Total assets in this category fell from $107.75 billion on May 14 to $94.17 billion on May 29. Meanwhile, the price of bitcoin has fallen 16% this year, while most other assets, such as stocks and commodities, have surged as capital continues to flow out of crypto.
Read more: Bitcoin Falls to 13th Asset as Capital Flies to AI and Precious Metals
Difficult to identify
While IBIT recorded approximately $720 million in net redemptions on May 26-27, 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 IBIT investor disclosed in recent 13F filings, making identification difficult.
The company said public data cannot determine whether the sale was driven by investor redemptions, risk management constraints or a discretionary decision to reduce exposure to Bitcoin.
Nonetheless, NYDIG said the transaction stands out because a large holder chose to accept a significant discount to exit a bitcoin-related position worth more than $1 billion during a period of persistent outflows and the bitcoin price remains below $80,000.
